A subdued week for macroeconomic events and markets – weekly update 9 July

A subdued week for macroeconomic events and markets – weekly update 9 July

Ben Seager-Scott
Published: 09 Jul 2018 Updated: 13 Jun 2022

A look back over macroeconomic and market events for the week ending 6 July 2018. It was a subdued week both for macro events and markets. PMI numbers showed resilience in the US and UK, whilst the US non-farm payrolls were something of a non-event. It’s also a quiet week ahead, with US CPI on Thursday the main focal point, given the prevailing inflation sensitivities.

PMI numbers from the US and UK support a positive outlook

PMI numbers from the US and UK continued to support a positive fundamental outlook, despite trade concerns. In the US, the Institute for Supply Management reported Manufacturing PMI rising sharply from 58.7 to 60.2, beating the expectations for a slight cooling to 58.5. The Non-Manufacturing reading rose from 58.6 to 59.1 (again, a slip was expected, to 58.3).

The UK also had solid numbers, albeit not as potent as the US figures – Manufacturing PMI rose marginally from 54.3 to 54.4 (a fall to 54.0 was expected) while Services PMI rose just over a whole point, up from 54.0 to 55.1 (no change was expected). PMI numbers from China and Japan were more uninspired. In China, the official Composite PMI slipped from 54.6 to 54.4. The private Caixin measure, which tends to include some smaller companies, showed Composite PMI rising from 52.3 to 53.0. Japan saw Composite PMI rise from 51.7 to 52.1.

Overall, these PMI readings are consistent with our view that the domestic US and UK economies remain robust having regained some of the momentum that they lost earlier in the year.

US non-farm payrolls did little to inspire

US non-farm payrolls did little to inspire this time around. Although the headline number of 213,000 jobs added was ahead of the 195,000 expected and came with upward revisions to the previous readings, the other data poured a bit of cold water on proceedings. Average hourly earnings growth was unchanged at 2.7% year on year (yoy), disappointing market forecasts of an acceleration to 2.8%.

The unemployment rate also surprised with an increase by 0.2% to 4.0% (no change was expected) – though this can largely be explained by the labour force participation ratio increasing by the same, up 0.2% to 62.9%. It’s not a bad report overall, and consistent with tight overall labour market conditions, but not enough to impact markets.

Last week’s other events

  • Eurozone Retail Sales slowed more than expected from 1.7% yoy to 1.4% (1.6% expected). The Producer Price Index measure of inflation rose a full percentage point, from 2.0% to 3.0% yoy (2.7% was expected)
  • US factory orders recovered from a -0.8% month on month (mom) fall in April to 0.4% growth in May (0% was expected)
  • UK Construction PMI rose from 52.5 to 53.1 (no change was expected), while data from the British Retail Consortium showed shop prices fell -0.5% yoy in June (from -1.1% in May). The Halifax building society reported UK house price growth of 1.8% (3 months to June on a year earlier), down from 1.9%, but higher than the 1.6% forecast

The markets

The limited macroeconomic and political developments last week translated into subdued market activity across major asset classes.

One-month performance of major asset classes


US equities had a positive week, rallying after the Independence Day break with the S&P 500 finishing up 1.6% on the week. Continental Europe also had a reasonable week, with the MSCI Europe ex-UK index returning 1.1%. The UK struggled, as the MSCI United Kingdom slipped -0.3%, while the Japanese TOPIX had a tough time, with a fall of -2.3%. The MSCI Emerging Markets index was down -0.7% on the week.


US 10-year Treasury yields fell 4 basis points (bps) to 2.82%, while the equivalent UK gilt and German bund yields were both down 1 bp to 1.27% and 0.29% respectively.


The oil price dipped to US$77.11 per barrel for Brent Crude, whilst gold was little moved overall on the week, finishing at US$1,255 per ounce. Copper continued to weaken, falling to US$2.81 per lb.


The week saw the pound and euro broadly stronger, whilst the US dollar and Japanese yen were marginally weaker. Sterling closed on Friday at US$1.34, €1.13 and ¥147.

The week ahead

It’s a fairly quiet week ahead, with nothing in the data schedule likely to have a major impact on markets, though some of the data will help to provide a bit more colour on the broader outlook. On Tuesday, the UK reports Industrial Production (a pick-up from 1.8% to 1.9% yoy is expected), and the Eurozone follows suit on Thursday, with industrial production growth expected to have picked up from 1.7% to 2.3% yoy. Also on Thursday, the US will report CPI inflation, which is forecast to carry on rising, from 2.8% to 2.9%. The daily breakdown is as follows:

Monday: Early in the morning, UK time, Japan reports the latest trade balance, as well as bank lending and the results from the latest Eco Watchers survey of economic conditions.

Tuesday: China reports CPI early in the morning (1.9% yoy from 1.8% expected). As well as UK industrial production, the UK will also report its latest trade balance and construction output. The Office for National Statistics will also begin reporting its new monthly GDP estimates. Later in the morning, the ZEW survey of Eurozone economic expectations is out. In the afternoon, the US releases the NFIB Small Business Optimism readings and also the JOLTS Job Openings for May.

Wednesday: Japan reports Producer Price Index inflation and Core Machine Orders in the morning, and then in the afternoon the US updates Mortgage Applications and Producer Price Index inflation numbers.

Thursday: Eurozone industrial production and US CPI are the main releases of the day (covered above) while the only other update of any note is the latest output from the Bank of England on the latest Credit Conditions & Bank Liabilities survey.

Friday: Chinese trade data are due out at some point on Friday, and in the morning we will also have Japanese capacity utilisation. In the afternoon, the US reports on import and export prices, whilst the University of Michigan sees the week out with the latest consumer sentiment and expectation survey results.


This article was previously published on Tilney prior to the launch of Evelyn Partners.