In the US, the core personal consumption expenditures (PCE) price index slowed in May, coming in at 0.1% m/m, in line with predictions and down from the 0.3% logged in April (upwardly revised from 0.2% previously). This marked the slowest pace of growth in six months. The headline measure was flat m/m, also down from 0.3% in April. On the other hand, personal income grew 0.5% m/m, higher than the predicted 0.4% and up from 0.3% in April, while spending grew 0.2%. This is encouraging data for the Federal Reserve, suggesting that the ongoing stickiness in inflation can perhaps be managed without seeing income growth eroded. In other US data released Friday, the final print of the University of Michigan sentiment index showed that the fall in US confidence in June was not as great as initially depicted. The index was at 68.2 on the final reading, compared with 65.6 on the first release.
UK Q1 GDP growth was revised up on the final estimate, from 0.6% on the initial print to 0.7%, thereby confirming the economy’s exit from the shallow recession seen at the close of last year. On an annual basis, growth was 0.3%, up from 0.2% on the previous reading. The upgrade was driven by an upwards revision to private consumption, which expanded 0.4% q/q rather than 0.2%, while gross fixed capital formation expanded at a slower pace (0.9% q/q) than initially supposed (1.3%).
UAE petrol prices for the month of July were announced yesterday, with prices at the pump set to fall for the second month running, this time by some 5%. This follows on from a more-than-six% fall logged in June, which will help to ease price pressures in the country in the coming month. Transport accounts for around 10% of Dubai’s inflation basket, with petrol prices making up a fair proportion of that, so this has implications for headline CPI inflation. However, it should be noted that global oil prices have picked up in June so pump prices will likely reflect that next month. Dubai’s annual inflation rate slowed to 3.8% y/y in May from 3.9% in April, and the average inflation in the first five months of the year was 3.6%.
China’s official manufacturing PMI was unchanged at 49.5 in June in data released yesterday, in line with expectations. However, the non-manufacturing index fell short of predictions at 50.5, down from 51.1 the previous month. This was the second month in a row that manufacturing contracted, with new orders weakening, while the non-manufacturing measure confirms that consumer demand remains weak despite some modest stimulus. This morning, the Caixin PMI manufacturing survey for June was released, which by contrast came in above predictions at 51.8, marginally stronger than May’s 51.7 and beating the projected 51.5.
Net foreign assets at Egypt’s commercial banks have turned positive at USD 14.3bn in May, from a negative USD 3.6bn the previous month. This marks a remarkable turnaround from the negative USD 25.5bn averaged over 2023 as a surge in FX inflows, kickstarted by the announcement of the UAE’s USD 35bn investment in Ras el-Hikma, have shored up Egypt’s finances in recent months.
Turkey is hiking electricity prices for households and the services sector this month, with costs rising by 38% for households and between 20% and 38% for services businesses. This will bring renewed upwards pressure on prices just as the central bank hopes that CPI inflation has peaked in May at 75.5% - it forecasts a slowdown to 38% by year-end.
CPI inflation in France slowed to 2.5% y/y in June, in line with predictions and down from 2.6% previously. Inflation also slowed in Spain, down to 3.5% from 3.8% previously, although there was a modest acceleration in Italy, from 0.8% to 0.9%. Germany’s CPI print is due to be released today and is also expected to slow modestly.
Today’s Economic Data and Events
18:00 ISM manufacturing, June. Forecast: 49.2
16:00 Germany CPI inflation, % y/y, June. Forecast: 2.3%
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