Global data slightly lagging forecasts; Eurozone weak

Econoday’s Relative Performance Index (RPI) ended the week at minus 8 to indicate that global economic data, on net, are coming in just on the low side of consensus estimates. This extends a month-long trend and is little changed from the prior week’s minus 9.

Eurozone economic data are significantly underperforming, at minus 41 on the RPI for a second week in a row which if extended over the coming two weeks could build expectations for a back-to-back rate cut at the ECB’s July 18 meeting. June’s harmonised inflation flash on Tuesday, July 2 will be critical for rate expectations.

Germany is at minus 36 and were it not for inflation data that are meeting consensus estimates, the country’s underperformance would be more pronounced, at minus 52 for the Relative Performance Index less Prices (RPI-P). This indicates substantial weakness for the country’s real economy.

The UK is also underperforming, at minus 25 on the RPI and minus 21 on the RPI-P. The Bank of England next meets on August 1 in the wake of the July 4 election.

Stronger-than-expected inflation data have lifted Canada to plus 37 which scales down to a still solid 26 excluding May’s CPI report. The Bank of Canada, which cut rates in early June, next meets in late July and if the country continues to outperform, another rate cut would not be the expectation.

Retail sales and industrial production both gave Japan a lift, moving from the prior week’s minus 11 to plus 15, while the US ended the week right at the global score of plus 8 for the RPI and plus 8 for the RPI-P. Scores at plus or minus 10 indicate that recent data, on net, are coming within Econoday’s consensus ranges, a fact that won’t add heat to talk of a Federal Reserve rate cut following May’s favorable PCE price results.