The week ahead: 17 - 21 June 2024

United States – On Tuesday we expect Retail Sales to come in relatively weak at 0.1% m/m. While earnings growth picked up in April, there are signs that borrowers are less likely to borrow to pay for purchases. Similarly, we expect Industrial production to have risen by 0.1% m/m, held back by manufacturing of new cars. The end of the week sees the release of the Manufacturing and Services PMIs, which surprised on the upside last month. We expect both to partially reverse the large increase last month, with manufacturing dropping to 50.7 and services back to 53.0.

Eurozone – Next Friday eurozone as well as French and German PMI’s will be published. We expect the eurozone services PMI to indicate continued expansion in the services sector, helped by real wage gains of consumers. The eurozone manufacturing PMI is expected to stay below neutral but increase on a monthly basis as global demand for industrial goods is showing early signs of picking up and headwinds such as the energy crisis are easing a bit. As a result the composite PMI will stay roughly stagnant compared to the May reading and remain above the neutral level, consistent with our view of positive second quarter growth for the eurozone economy.

The Netherlands – The unemployment rate is expected to have marginally increased to 3.8% in May (up from 3.7% in April) as underlying labour market tightness continues to ease slightly. From a historical perspective the labour market remains tight, with a net participation rate at record levels of 73.4% of the population between the ages 15 and 75 are working, while the remaining labour supply is limited. Labour demand, including from the government, remains strong at 1.1 vacancies per job seeker. We expect the unemployment rate to average 3.8% in 2024, up from 3.6% in 2023.

China – We still expect the PBoC to come with further (mini) policy rate cuts and RRR cuts in the coming months to help propping up sluggish domestic demand, also given the still subdued pace of inflation. With Fed rate cut expectations having been delayed and the yuan still at relatively weak levels versus USD, we concur with the (median) consensus expectation that the PBoC will wait for another month or so. Still, the fact that some major central banks (ECB, BoC) have started cutting may have created an opportunity for the PBoC to come with another mini rate cut already next week. Meanwhile, (annual growth of) retail sales is expected to have picked up somewhat in May after a weak April number, while industrial production is estimated to have slowed a bit following a strong April reading.