M3 money supply growth (July): Moderate rise
International Trading
THE TECHNIQUE OF GIVING A GOOD MASSAGE
14 years ago
Monday, August 23, 2010
, Posted by Usman Ali Minhas at 3:03 AM
German ifo business climate (August): unchanged
PMI manufacturing index EMU (August): unchanged
M3 money supply growth (July): moderate rise
German CPI inflation (August): slight decrease
The ifo business climate for Germany might only have remained stable in August, after its unexpected improvement in July. The German ZEW economic sentiment and the US ISM manufacturing index have deteriorated. German yield spreads have narrowed, as long-term interest rates have decreased and shortterm rates increased. The DAX, crude oil prices and the euro have gone up.
For similar reasons, most of the economic climate indicators in the EMU, namely the Purchasing Managers’ Index for the manufacturing sector in Germany and in the EMU, Consumer confidence in Germany, in Italy and in the EMU, and Belgian business confidence are likely to remain unchanged or only improve slightly in August.
German retail sales could have recovered in June, as both German retailers’ business assessment and consumer confidence improved significantly. EMU industrial new orders will probably have increased in June, just as the corresponding German figure did. Q2 German GDP growth is not likely to be revised significantly. The detailed breakdown will probably show that all components have increased.
Although market interest rates still provide little incentive to put funds into time deposits or other short term instruments, euro area M3 has started to rise again. However, the monthly increase in July will probably have been somewhat lower than in June, when repurchase agreements made an exceptional contribution to M3 growth, helping to push the annual growth rate up to 0.2%. In July, we expect M3 to have risen by 0.4% yoy. Loans to “other euro area residents” (the private non-bank sector) have continued their still subdued upward trend: On the one hand, households are taking advantage of historically low interest rates, especially for house purchases. On the other hand, business activity is picking up, raising corporate credit demand for short-term loans in particular. We therefore expect the credit growth rate to have accelerated somewhat further to 0.6% yoy in July, up from 0.3%.
The preliminary results for national German CPI in August will be released on Friday. We expect German consumer prices to have decreased slightly by –0.1 % month-on-month, which would bring the annual rate down to 0.9 %. Due to typical seasonal effects, prices for accommodation services are likely to have been lower than in July; prices for package tours could have declined slightly. Furthermore, clothing prices could have rebounded from their fall in the previous month. We expect heating oil and gasoline prices to have had little effect on the monthly inflation rate. Food prices could have continued their upward trend in August.
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