Monthly GDP (Jul 2020) Preview - 0700BST 11/9/20

GDP: BBG: +6.7% m/m, -7.5% 3m/3m; Prev(Jun): +8.7% m/m, -19.1% 3m/3m

IP: BBG: +4.2% m/m, -8.7% y/y; Prev (Jun): +9.3% m/m, -12.5% y/y

Services: +7.0% m/m, -7.8% 3m/3m; Prev (Jun): +7.7% m/m, -19.9% y/y

• M/M GDP is expected to increase 6.7% in Jul after edging up 8.7% in Jun.
• Despite the gains registered in May and Jun, the economy remains 17.2% below Feb's level.
• Services improved 7.7% in Jun but remains 17.6% below the pre-crisis level and markets expect the indicator to rise again by 7.0% in Jul.
• IP ticked up 9.3% in Jun after having grown 6.2% in Jun, however, the May and Jun upticks could not make up for the losses recorded in Mar and Apr.
• In July, production is forecast to rise at a slower pace of 4.2% on a monthly basis.
• The services and mfg PMIs both registered above the 50-mark in Jul and Aug, showing the fastest rate of expansion in 5 years in the service sector, while output in the mfg sector hit a 6-year high.
• Nevertheless, both surveys reported another downtick in employment as companies still aren't operating at full capacity and the backlog of work is still declining.
• There are also several downside risks for a sustained recovery such as the lingering fear of rising unemployment once the furlough scheme ends as well as rising Covid-19 cases and subsequent social distancing measures.