- BoE Inflation Report was dovish. Carney:
All of these labour market signals tell us that slack is being used up at a faster pace than we had anticipated… But that’s not the end of the story. A range of other indicators suggest there was more slack in the first place. In particular, pay growth has been remarkably weak, even as unemployment has fallen rapidly… But it also seems there has been an increase in labour supply at a given wage rate, especially among older age groups… Whatever the causes, these developments point to the economy being able to sustain a higher level of employment and lower rate of unemployment without generating additional inflationary pressures. Indeed, continued low wage growth has enabled firms to expand their margins despite the sharp increase in employment. In the Committee’s best collective judgement, the degree of slack has narrowed somewhat, and our central estimate is now broadly in the region of 1% of GDP. In light of the heightened uncertainty about the current degree of slack, the Committee will be placing particular importance on the prospective paths for wages and unit labour costs… The Committee’s guidance remains unchanged: increases in Bank Rate, when they come, are likely to be gradual and limited… The MPC’s expectations for gradual and limited rate increases are shared broadly by markets.
- UK Employment was strong, with jobless claims -33.6k vs -30k exp. ILO UER declined to 6.4% as exp vs 6.5% prev.
- UK Weekly earnings were weak, -0.2% in June vs -0.1% exp. The May figures were revised up however, to 0.4% from 0.3%.
- US Retail Sales was flat MoM vs +0.2% exp and prev. The Control Group rose just 0.1% vs 0.4% exp and 0.6% prev
- France CPI was stable at 0.6% as exp. Germany’s figure was not revised.
- Japan 2Q GDP declined -1.7% QoQ vs -1.8% exp and +1.6% prev
- China M2 dropped sharply to 13.5% vs 14.4% exp and 14.7% prev. also dropped sharply to 6.7% vs 8.6% exp and 8.9% prev
- China IP declined to 9.0% vs 9.2% exp and prev
- China Retail Sales declined to 12.2% YoY vs 12.5% exp and 12.4% prev
- Wed: NZ Mfg PMI, Retail Sales, UK RICS House Price Balance
- Thu: France, GDP, Payrolls, Germany GDP, EU CPI revision, US Jobless Claims
- Fri: UKGDP, US Empire Mfg, PPI, UMichigan Confidence
- Mon: US NAHB, RBA Minutes
- Tue: UKCPI, USCPI, US Housing Starts, Building Permits,