What is the key data from EU next week? - Nomura
|Analysts at Nomura noted that Preliminary May inflation data in the eurozone and the UK’s manufacturing PMI are in focus next week.
Key Quotes:
"UK household borrowing (Wednesday): The story at the moment in the borrowing data comes from consumer credit, which continues to grow at a strong rate. We expect a similar rate of growth in credit in April to March, i.e. around the £1.6bn level. Mortgage approvals remain range-bound and we do not see any material improvement in total net lending for house purchases in the April data – particularly with the BBA data for April falling to their lowest for eight months.
Euro area, preliminary May inflation (Wednesday): We forecast the flash reading of euro area HICP inflation to fall to 1.5% y-o-y in May from 1.9% y-o-y in April. We forecast core inflation to fall to 1.1% from 1.2%. Base effects from last year`s decline in oil prices are weakening and this accounts for most of the projected fall in the headline rate. A partial unwind of the distortionary effects on packaged holiday prices from the timing of this year’s Easter holidays accounts for the small projected drop in core inflation. Notwithstanding this likely retreat we still expect core inflationary pressure to build in the eurozone in coming months as the recovery strengthens and broadens and as the output gaps close.
UK manufacturing PMI (Thursday): April’s surge in the manufacturing PMI was owing to the sharp rise in output and new orders balances, with export orders having been supported by a weak sterling and strengthening demand growth in Europe. We would not be surprised to see some payback in May because of the scale of increase in the April report. Other UK data include: House prices (Nationwide), consumer confidence (GfK), the Lloyds business barometer, the BRC shop price index (which is closely correlated with headline CPI inflation) and money supply are all due for release this week."
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