Market Economics | Interest Rate Strategy - BNP PARIBAS ...

Key Data Preview
Chart 5: UK Retail Sales vs RICS Sales to Stocks
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RICS Sales to Stocks
(3m-lag, RHS)
Retail Sales (% y/y)
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Source: Reuters EcoWin Pro
Jun (f) May Apr Mar
% m/m 0.3 0.6 0.0 0.7
% y/y 0.7 2.2 1.3 1.5
% 3m/3m 1.7 1.2 0.1 -2.4
% 3m/yr 1.4 1.7 1.6 0.5
Key Point:
We expect a solid m/m expansion, though base
effects will push y/y growth to a subdued level.
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BNP Paribas Forecast: Solid
UK: Retail Sales (June)
Release Date: Thursday 22 July
We expect a solid 0.3% m/m pace of expansion in UK retail
sales during June. However, given the m/m surge a year
earlier, the y/y pace of growth is likely to slump to below
1% y/y.
The joker in the pack this month is likely to be the effect of
the football world cup. There have been mixed reports with
regards to what impact this had on consumer spending.
One retailer complained of poor sales of flatscreen TVs in
comparison with the experience during past football
competitions. This suggests that household goods probably
didn’t take off in a big way. By contrast, food and
beverages sales are likely to have been buoyed to some
extent – reinforced by the particularly favourable weather
during the month.
Survey indicators have been mixed. The GfK measure of
consumer confidence continued to trend lower and
suggested that consumers’ appetite for major purchases
continued to slide. By contrast the BRC retail sales monitor
showed a modest acceleration in sales values (around
3.4% y/y). However, since the latter is reported in nominal
terms, subtracting inflation would leave sales volumes
close to our estimate for the ONS equivalent.
Chart 6: French Industry Surveys (Normalised)
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Own Production Outlook
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Composite Indicator (RHS)
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General Production Outlook
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Source: Reuters EcoWin Pro
SA Jul (f) Jun May Jul 09
Services 97 98 99 78
Industry 94 95 97 80
Overall Manuf. Outlook -8 -4 -3 -40
Own Manuf. Outlook -5 -7 3 -18
Key Point:
Both services and industry should suffer a decline in
confidence in July. Global uncertainties and fiscal
tightening should weigh on growth momentum.
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BNP Paribas Forecast: Second Decline
France: Monthly Industrial Survey (July)
Release Date: Thursday 22 July
Industrial production has done remarkably well in the past
few months: manufacturing output rose 2.3% in the three
months to May. This should translate into strong GDP
growth in Q2; we forecast 0.5% q/q. However, the
momentum of the recovery seems to be fading.
We expect the July confidence indices to confirm this
concern. The INSEE survey may print a second
consecutive decline for services, which has not occurred
since the trough of the cycle in March 2009.
Despite more favourable international conditions (with the
weaker euro helping exports outside the eurozone and
some improvement in GDP growth in most eurozone
trading partners), industrial confidence is also likely to
retrench.
Own manufacturing output suffered a severe setback in
June, and we may see a technical correction in July.
However, other sub-indicators are likely to deteriorate
further. In particular the overall manufacturing outlook
should weaken again, and more significantly than the
previous month. Overall, we forecast industrial confidence
to decline for the second month in a row.
Market Economics 166 July 2010
Market Mover
60
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