Thomas Watts, Investment Analyst, abrdn Portfolio Solutions, comments on the economic data releases this week.
He said: “After a busy week for European markets, seemingly gearing up for a central bank rate cut in June on the continent and the UK blue chip index getting close to all-time highs, the US index has been somewhat shunned by investors.
The beginning of the week should rectify this somewhat, with today seeing a raft of US data being released from various sources. Perhaps the most striking will be US Retail Sales figures due to the association with the consumer. How much the average person on the street is spending at the shops acts as the primary gauge of consumer spending, which in turn, accounts for the majority of overall economic activity. The data also gives us some insight into how various retailers are faring on what is becoming an increasingly competitive sector.
Alongside the data we also have the latest Empire State Manufacturing Index reading, a survey of manufacturers from the New York State area. Respected by economists due to its sheer breadth, the survey of about 200 manufacturers in New York state which asks respondents to rate the relative level of general business conditions. The data is also useful as it acts as a leading indicator of economic health, businesses react quickly to market conditions and changes in their sentiment can be an early signal of future economic activity such as spending, hiring and investment.
During the middle of the week, attention will be firmly on domestic shores as not only do we receive a speech from Bank of England (BoE) Governor, Andrew Bailey on Tuesday evening, the Office for National Statistics releases its inflation numbers the following day. With those at the BoE seemingly visibly torn in their rate setting committees, the week’s CPI data could go a long way it helping to form a clear path for the central bank to start cutting rates in July.
The week should be wrapped up here in the UK too as the domestic equivalent of the US’s earlier retail sales figures is released here. With news that the country’s largest supermarket, Tesco, saw profits soar by 160%, to £2.3 billion, whilst commenting that price pressures are easing ‘substantially’ amid the cost of living crisis, it will be interesting to see if more broad, official figures back this sentiment up.”
