MNI European Morning Briefing

By Les Commons

     LONDON (MNI) - Thursday throws up a busy calendar on both sides of the

Atlantic, with UK retail sales and EMU inflation data early check points.

     The European calendar gets underway at 0530GMT, with the publication of the

French unemployment data.

     At 0830GMT, the UK July retail sales numbers will cross the wires.

     UK retail sales grew by 0.6% m/m in June, aided by the month's warm

weather, which meant on the quarter sales volumes were up 1.5% in the second

quarter of the year and sales are seen slowing in July.

     Volumes were down 1.4% q/q in the first quarter so over the first half of

the year sales activity was broadly neutral. Thursday's data, collected between

June and July, will provide the first glimpse of how things fared in the second

half of the year.

     The story behind the numbers in June was one of strong sales at household

good stores, up 3.3% m/m, offsetting that of food sales, which fell 0.5% m/m,

with the unusually warmer June boosting clothing sales volumes (up 6.2% y/y) and

non-store retailing volumes (up 17.6% y/y).

     Analysts foresee growth in sales volumes moderating in July, with a median

forecast of 0.3% m/m pencilled in.

     On the year, growth looks destined to come in under the level set a month

ago, with all 7 analysts who cast a forecast expecting an outturn below the 2.9%

y/y recorded in June. The MNI median for year-over-year growth is 1.4%.

     Excluding fuel, month-on-month growth is expected to come in at 0.1% for an

1.4% outturn on the year.

     At 0900GMT, the EMU trade data and the EMU July final inflation numbers

will cross the wires.

     In the US, the main releases are expected at 1230GMT, when the latest

jobless claims and the August Philadelphia Fed Manufacturing Index cross the

wires.

     The level of initial jobless claims is expected to fall by 4,000 to 240,000

in the August 12 employment survey week after a 3,000 increase in the previous

week. Claims were at a level of 234,000 in the July 15 employment survey week.

The four-week moving average, which has declined in the last two weeks, would

rise by 1,500 in the coming week as the 234,000 level in the July 15 week drops

out of the drops out of the calculation, assuming the MNI forecast is correct

and there are no revisions.

     The Philadelphia Fed index is forecast to slide very modestly to a reading

of 19.2 in August following the declines in June and July.

     At the same time, the Canadian Monthly Survey of Manufacturing will be

released.

     US July Industrial Production will be released at 1315GMT.

     Industrial production is expected to rise 0.3% in July after a 0.4% gain in

the previous month. Factory payrolls rose by 16,000 in July, while auto

production jobs up 2,000 and the factory workweek was steady at 40.9 hours. The

ISM production index fell to 60.6 in July from 62.4 in the previous month.

Utilities production is expected to rebound in the month after a flat June

reading, while mining production is forecast to post another increase. Capacity

utilization is forecast to rise modestly to 76.7% from 76.6% in June.

     The July US leading indicators are expected at 1400GMT, with the natural

gas stocks data expected at 1430GMT.

     The index of leading indicators is forecast to rise by only 0.3% in July

after jumping by 0.6% in June. The rate spread should be a significant positive

factor this month, with other positive contributions from falling jobless

claims, higher stock prices, and a rise in consumer expectations.

     Dallas Federal Reserve Bank President Rob Kaplan will participate in a

moderated Q&A session hosted by Lubbock Chamber of Commerce in Lubbock, Texas,

with audience and media Q&A. At 1754GMT, Minneapolis Federal Reserve Bank

President Neel Kashkari speaks at a moderated Q&A session at an Edina Rotary

Club event in Edina, Minnesota, with audience Q&A.

     Late US data sees the Fed's weekly M2 Money supply data published at

2030GMT.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com