MNI GLOBAL MORNING BRIEFING: July Flash PMIs Eye 50 Level

Following Thursday’s BOJ, CBRT, ECB and SARB meetings, the week rounds off with UK retail sales, followed by July flash PMIs. In the afternoon Canadian retail trade (and the US flash PMI) will be of note.

UK Retail Sales (0700 BST)

A further slump is on the cards for UK retail sales in June, seen contracting a further 0.6pp to -5.3% y/y and by 0.5pp to -6.2% y/y when excluding auto fuels. This translates into another month-on-month contraction, seen at -0.4%, slightly softer than -0.7% m/m in May.

Consumer confidence was at a record low in June as recessionary fears loom, underpinning the fall in demand.

Europe Flash PMIs

The July flash estimates are seeing further 0.4 to 1.4-point slowdowns. All indicators are edging closer to the breakeven of 50, however, are expected to remain in expansive territory for July. The close relationship between PMIs and GDP growth foreshadow further slowdowns in GDP going into H2.

Manufacturing is seen again losing momentum on the back of a new order slowdown, as the industry struggles with waning demand and overstocked inventories. Supply chain issues remain acute. Services PMIs will weaken further as inflation and continued geopolitical uncertainty triggers tighter purse strings.

Following Wednesday’s euro area consumer confidence plunging to a record low, downside risks, especially to services, could materialise. European PMIs are converging, and consensus expectations are as follows:

France (0815 BST): Manufacturing 51.0 (-0.4 points), services 52.7 (-1.2)
Germany (0830 BST): Manufacturing 50.7 (-1.3), services 51.4 (-1.0)
Eurozone (0900 BST): Manufacturing 51.0 (-1.1), services 52.0 (-1.0)
UK (0930 BST): Manufacturing 52.0 (-0.8), services 53.0 (-1.3)

Canada Retail Sales (1330 BST)

In contrast to the UK, Canadian retail activity remains buoyant (albeit lagged), anticipated to expand by 1.6% m/m and 1.8% m/m (excluding auto).

US Flash PMI (1445 BST): Forecast: manufacturing 52.0 (-0.7), services 52.7 (steady)

The US (S&P Global) July flash PMI prints are projected to remain more stable than in Europe. This follows the 4.2-point dive in manufacturing in June to the lowest level since July 2020 as demand saw a stark contraction. Forward looking indicators in the June report flagged outlooks clouding over further, with future output expectations seeing an industrial downturn.

Source: MNI / Bloomberg

There are no key policymaker appearances on today’s schedule, as the Fed is in its blackout period before the Wednesday decision and the ECB quiet after yesterday’s hike, although many ad hoc appearances could be seen.

Date	GMT/Local	Impact	Flag	Country	Event
22/07/2022	0600/0700	***		UK	Retail Sales
22/07/2022	0715/0915	**		FR	IHS Markit Services PMI (p)
22/07/2022	0715/0915	**		FR	IHS Markit Manufacturing PMI (p)
22/07/2022	0730/0930	**		DE	IHS Markit Services PMI (p)
22/07/2022	0730/0930	**		DE	IHS Markit Manufacturing PMI (p)
22/07/2022	0800/1000			EU	ECB Survey of Professional Forecasters
22/07/2022	0800/1000	**		EU	IHS Markit Services PMI (p)
22/07/2022	0800/1000	**		EU	IHS Markit Manufacturing PMI (p)
22/07/2022	0800/1000	**		EU	IHS Markit Composite PMI (p)
22/07/2022	0830/0930	***		UK	IHS Markit Manufacturing PMI (flash)
22/07/2022	0830/0930	***		UK	IHS Markit Services PMI (flash)
22/07/2022	0830/0930	***		UK	IHS Markit Composite PMI (flash)
22/07/2022	1230/0830	**		CA	Retail Trade
22/07/2022	1345/0945	***		US	IHS Markit Manufacturing Index (flash)
22/07/2022	1345/0945	***		US	IHS Markit Services Index (flash)