MNI GLOBAL MORNING BRIEFING: US ISM Services to Soften

On Wednesday markets will be watching to see whether the German May trade deficit was fleeting. Signs of slowing Italian and Spanish services PMIs are also due in the morning, whilst the focus in the afternoon will turn towards the US ISM services PMI.

Germany Trade Balance (0700 BST)

The German trade balance is anticipated to have re-entered positive territory at EUR 0.2bln surplus in June, following the EUR 1.0bln deficit in May, which was the first deficit since 1991. High commodity prices and food prices generated inflated exports, as energy imports soar due to the effects of the ongoing Ukraine war.

Swiss CPI (0730 BST)

The Swiss inflation rate should hold steady at the 1993 high of +3.4% y/y in July, with a modest -0.1% m/m decrease in prices following +0.5% m/m in June.

Global commodity prices are largely to blame for headline CPI, meanwhile, core CPI is likely to edge up another 0.1pp to +2.0% y/y in July, reaching the ceiling of the SNB’s target rate as inflationary pressures become more widespread. As such, September’s quarterly meeting will likely see another 50bp hike, following the 50bp surprise in June.

Services PMIs

Final services PMIs are due for France, Germany, the UK and the US today, likely confirming a slip into contractionary territory for Germany and the US. First and final prints are due for Spain and Italy and are expected to echo themes of slowing new orders as very weak consumer sentiment and inflation-eroded purchasing power see demand declining.

Spain (0815 BST): Services could see around a 2-point decrease to 52.0 points in the third month of slowing growth.
Italy (0845 BST): A 0.5-point slowdown to 50.1 is expected for July, however, a downside surprise could push the PMI below the expansionary breakeven of 50.

Eurozone PPI & Retail Trade (1000 BST)

Eurozone factory-gate inflation is forecasted to slow for the second consecutive month in June. A deceleration of 0.6pp to +35.7% y/y is pencilled in, largely due to easing energy prices. The June retail sales print is expected to reiterate the theme of slowing consumer demand, stalling compared to May and contracting 1.7% y/y.

ISM Services (1500 BST)

The US service sector’s subdued start to Q3 will be reflected in today’s ISM index, which follows the final S&P Global print. The anticipated 1.8-point decline to 53.5 would be the lowest reading since May 2020, when then indicator contracted to 45.2. Particular focus will again be on the evolution of prices, which could ease for the third consecutive month, following the ISM manufacturing PMI’s sharp price deceleration on Monday.

US June ISM Services PMI:

Source: ISM

The key policymaker appearances due today are again US based and include Philadelphia Fed's Patrick Harker, Richmond Fed's Tom Barkin and Minneapolis Fed's Neel Kashkari.

Date	GMT/Local	Impact	Flag	Country	Event
03/08/2022	0600/0800	**		DE	Trade Balance
03/08/2022	0630/0830	***		CH	CPI
03/08/2022	0715/0915	**		ES	IHS Markit Services PMI (f)
03/08/2022	0745/0945	**		IT	IHS Markit Services PMI (f)
03/08/2022	0750/0950	**		FR	IHS Markit Services PMI (f)
03/08/2022	0755/0955	**		DE	IHS Markit Services PMI (f)
03/08/2022	0800/1000	**		EU	IHS Markit Services PMI (f)
03/08/2022	0800/1000	*		IT	Retail Sales
03/08/2022	0830/0930	**		UK	IHS Markit/CIPS Services PMI (Final)
03/08/2022	0900/1100	**		EU	retail sales
03/08/2022	0900/1100	**		EU	PPI
03/08/2022	1100/0700	**		US	MBA Weekly Applications Index
03/08/2022	1345/0945	***		US	IHS Markit Services Index (final)
03/08/2022	1400/1000	***		US	ISM Non-Manufacturing Index
03/08/2022	1400/1000	**		US	factory new orders
03/08/2022	1430/1030			US	Philadelphia Fed's Patrick Harker
03/08/2022	1430/1030	**		US	DOE weekly crude oil stocks
03/08/2022	1545/1145			US	Richmond Fed's Tom Barkin
03/08/2022	1830/1430			US	Minneapolis Fed's Neel Kashkari