Euro area:
A busy week ahead for top-tier euro area economic releases will bring the European Commission’s June business and consumer surveys, ECB bank lending figures for May (both due Thursday) and the first of the flash June inflation estimates form the member states (Friday). Following Friday’s disappointing flash PMIs, the Commission’s economic sentiment indicator (ESI) is expected to have merely moved sideways in June – at 96.0, still some 4% below the long-run average – to leave the quarterly average broadly in line with Q1. German and French consumer confidence surveys (Wednesday) will offer more insight into recent developments.

The main focus at the end of week will be the June inflation estimates from France, Italy and Spain. Having increased in May, headline HICP inflation in France and Spain are expected to have edged lower this month, by 0.1ppt to 2.5%Y/Y and 0.3ppt to 3.5%Y/Y respectively. And while the equivalent Italian HICP rate is forecast to have ticked slightly higher it is expected to remain extremely weak at 0.9%Y/Y. The ECB’s latest consumer survey for May (also due Friday) will likely suggest that household inflation expectations three years ahead remain relatively well anchored at 2.4%Y/Y. In April, equivalent rates for Germany and France stood at 2.1%Y/Y, just above the ECB’s 2% target.

US:
The key US data release this week will be the May personal income and consumption data, including the closely-watched associated PCE deflators figures on Friday. While personal income and spending growth is expected to have ticked slightly higher compared with April (up 0.1ppt a piece to 0.4%M/M and 0.3%M/M respectively) this will still remain below the respective averages in Q1. Moreover, the rise in the core PCE deflator – the inflation measure favoured by the Fed – is expected to have slowed to just 0.1%M/M in May, which would be the softest since November and well below the average in Q1 (0.4%M/M). This would leave the annual rate down 0.2ppt to 2.6%Y/Y, which would be the lowest since March 2021. 

In terms of activity, advance May figures for goods trade and durable goods orders are due Thursday. Daiwa America forecasts a drop in orders in May (-1.0%M/M), in part due to fewer Boeing orders, while the goods trade deficit is expected to have narrowed slightly. Meanwhile, consumer confidence surveys – including the Conference Board (Tuesday) and University of Michigan (Friday) – will likely show a deterioration in sentiment in June. The UoM inflation expectations indices will also be closely watched. Various housing market indicators – including new and pending home sales (Wednesday and Thursday respectively) are also due.

Japan:
Inflation will be the key highlight in this week’s Japanese data calendar, with the Tokyo CPI figures for June due on Friday. Headline inflation in the capital is expected to have ticked slightly higher this month – up 0.1ppt to 2.3%Y/Y – due in part to base effects in energy. Indeed, when excluding energy and fresh food – the BoJ’s preferred core CPI rate is expected to have moved sideways at 1.7%Y/Y. Ahead of this, tomorrow will bring the release of the BoJ’s measures of underlying national inflation in May, while the services PPI data for May are also due.

In terms of activity, the main focus will be May industrial production figures (Friday). Manufacturing output is expected to have returned to growth last month – the Bloomberg survey consensus is for an increase of 2.0%M/M – following the decline in April led by a cut in production of aircraft parts and motor vehicles. Meanwhile, the value of retail sales (due Thursday) is expected to have risen for a fourth month out of five, in part due to higher prices, while the latest labour market figures (Friday) are expected to see the jobless rate unchanged at 2.6% in May.

UK:
In the UK, after Friday’s flash PMIs signalled a further notable softening in recovery momentum in services, but further improvement in the manufacturing sector, the data calendar in the first half of this week will remain focussed on sentiment surveys, with the CBI’s industrial trends survey (later today) to provide further insight into manufacturing conditions and the distributive trades survey (Wednesday) to offer a first insight into retail conditions in June. Last month, retailers expected sales volumes in June to be broadly in line with the norm for the time of year. 

The only other release of note comes on Friday, with updated national accounts figures for Q1. The preliminary release brought an upside surprise to GDP, which accelerated 0.6%Q/Q following the technical recession in the second half of last year, to mark the fastest quarterly expansion since Q421. Growth was principally led by domestic demand, of which the rise in fixed investment was the strongest for four quarters and accounted for half of GDP growth. But net trade also provided a boost as the decline in imports outpaced exports. As such, the current account deficit is expected to have narrowed slightly in Q1 from £21.2bn in Q4.