Look ahead: A flurry of data on economic growth
Many economies around the world, including in the US and Europe, have been going strong, boosting consumer spending and stock valuations. Figures on consumer and business confidence that are scheduled to be released in several countries this week will show whether the optimism continues. Earnings of multinational companies this week will provide further clues as second-quarter earnings season gets into full swing.
Monday: Singapore’s manufacturing and transportation sectors were upbeat about sales and profit expectations in the second quarter despite uneven growth across industries in the previous quarter. Quarterly business sentiment results will indicate whether there’s room for more optimism.
Google had a strong first quarter, and its stock has been on the rise since April, closing in on $1,000 per share. Google’s parent company, Alphabet Inc., releases second-quarter earnings after the market closes.
Tuesday: The mood of French business leaders reached a six-year high in June. July results of the National Institute of Statistics and Economic Studies survey, which tracks output, orders, and inventories, will show how upbeat executives across French industries remain going into the second half of the year.
The UK manufacturing sector was upbeat in June and showed little, if any, impact from the snap election June 8th. Results of the Confederation of British Industry’s quarterly industrial trends survey will provide clues about whether demand for UK manufactured goods continues to be strong.
US consumers are more confident than they have been in nearly 16 years, expecting the economy to expand and jobs to be plentiful, the Conference Board reported in June. July results of the Conference Board’s survey will show whether consumers’ sentiment remains positive. Based on steady job gains, increased household spending and business investments, and declining inflation, the US Federal Reserve’s Open Market Committee decided to raise the federal funds rate following its May meeting. At its July meeting, scheduled for Tuesday and Wednesday, the committee will review economic indicators to determine further monetary policy changes.
General Motors will release second-quarter earnings. In the first quarter, the automaker’s profits jumped 33% – a record since GM emerged from bankruptcy in 2009.
Wednesday: Most Italian businesses and consumers grew a little more confident in June. Results for July, which the Italian National Institute of Statistics releases, will show whether business and consumer confidence continues to grow.
French President Emmanuel Macron, who was elected June 18th promising to overhaul France’s economic policies, has gotten a boost from an improving economy. French consumer confidence rose to a ten-year high and the French business climate to a six-year high in June. France’s National Institute of Statistics and Economic Studies releases figures that will show whether consumers continue to be upbeat.
The UK Office for National Statistics releases GDP figures for the second quarter, providing further clues on how the UK’s decision to leave the EU is affecting the economy. Economic growth in the first quarter slowed, partly due to lower household spending.
Companies reporting second-quarter earnings include Coca-Cola, Facebook, Ford, and Daimler. Coca-Cola, which has seen revenue decline in five of the previous seven quarters, has a new CEO. Ford and Daimler started the year with strong sales, but investors have been tepid about traditional automakers. Analysts expect Facebook’s earnings to increase year-over-year.
Thursday: Figures to gauge the mood of consumers in the US, Germany, and Pakistan are released. US and German consumers considered their economy in excellent shape in June. Bloomberg’s US Consumer Comfort Index came close to a decade-high last month, and July figures will show whether the upswing continues. The GfK Consumer Climate Indicator for Germany is expected to rise to its highest reading since October 2001. Pakistan’s Consumer Confidence Index reached an all-time high in March but dropped slightly in May.
Companies releasing second-quarter earnings include Dow Chemical and Intel. Dow Chemical exceeded analysts’ expectations in the first quarter as the chemical industry benefited from a strong global economy. Investors are closely watching the tech sector, particularly chipmakers such as Intel, during the second-quarter earnings season to determine whether stocks are overvalued.
Friday: Economic sentiment has been rising in the Euro Zone, reaching a ten-year high in June. July figures the European Commission releases will show whether retail, manufacturing, and construction sectors remain upbeat among the 28 EU members that adopted the euro currency.
The US Bureau of Economic Analysis releases GDP figures for the second quarter. In the first quarter, the US economy grew at its weakest pace in three years despite a US labour market that was near full employment. Second-quarter GDP figures will provide a clue as to whether first-quarter figures were an aberration.
—Sabine Vollmer (Sabine.Vollmer@aicpa-cima.com) is a CGMA Magazine senior editor.