The following is an excerpt from a Capital Daily report by London-based research provider Capital Economics.

-    US retail sales are likely to have grown by around 0.4% m/m in July (Tuesday)

-    Japan’s economic growth may have slowed in Q2 (Monday, 00.50 BST) …

-    … but the euro-zone should have stopped shrinking (Wednesday) 

What to watch for this week: United States

The improvement in consumer confidence over the first half of the year and the marked gains in retail employment suggest that retail sales growth will soon accelerate. We expect retail sales (Tuesday) to have grown by around 0.4% m/m in July. Core retail sales – excluding gasoline, autos and building materials – probably increased about 0.3% m/m.

In the industrial sector, we suspect that some of the recent improvement in the regional activity surveys will be reversed in August. We forecast some slippage in the headline indices of both the Empire State and Philly Fed indices on Thursday. In addition, we think that industrial production (also Thursday) may have been flat last month as total hours worked in the manufacturing sector declined. However, the sharp increase in the production index in July’s ISM manufacturing survey suggests there will be some improvement in the months ahead.

Continental Europe

This week’s key event will be Wednesday’s release of Q2’s flash GDP estimate for the euro-zone. We expect the economy to have expanded by around 0.2% on the quarter, which would be the first quarterly rise since Q3 2011. The figures for Greece (Monday) and Portugal (Wednesday) will probably show that their recessions eased last quarter. Meanwhile, we have pencilled in quarterly rises in German and French GDP (both also Wednesday) of 0.6% and 0.1%, respectively. Meanwhile, the German ZEW measure of investor sentiment (Tuesday) will probably remain at a high level in August, which bodes well for prospects in Q3 too. (Ben May)

UK

We expect the minutes of the last MPC meeting (Wednesday) to show that the Committee voted unanimously to introduce forward guidance. Everyone seemed to agree at July’s meeting that the rise in rate expectations had been unwarranted. And individual members are still able to vote to tighten policy if they think that the inflation condition will be breached. Otherwise, attention this week switches back to the economic data. July’s CPI inflation figures (Tuesday) may confirm that last month’s 2.9% figure was the peak, while retail sales volumes (Thursday) should have posted a decent rise in July. (Vicky Redwood)

Japan

The key event this week is the publication of preliminary GDP data for Q2 on Monday (

00.50 BST). We expect growth to have slowed from 1.0% q/q in the first quarter, to 0.7%. The consensus is expecting an expansion of 0.9%. However, uncertainty over the recent strength of household spending means the risks to our forecast are on the downside. (Marcel Thieliant)

China

There are no major data or events scheduled this week.

The key activity data for July, released on Friday (9th), provided further evidence that the economy is improving. In particular, growth in industrial production surged from 8.9% y/y in June to 9.7% last month, far stronger than most had expected. But other data imply that the drivers of the rebound remain a concern. Growth is being led once again by fixed asset investment, which increased at its fastest annual pace since March, while growth in retail sales slowed. Meanwhile, headline inflation in consumer prices steadied at 2.7% y/y in July. But we expect it to climb higher given there is little sign that the pick-up in pork prices is likely to stop soon. Finally, recent efforts by the authorities to slow the pace of lending growth now seem to be having an impact. Although net new RMB bank loans amounted to RMB700bn in July, above the Bloomberg consensus, other forms of credit have slowed further. (For more, see our China Economics Update published on 9th August.) (Qinwei Wang)

Hong Kong’s GDP figures for Q2 are scheduled to be released on Friday. Its economy has been very weak for the past couple of years, due mainly to the continued poor performance of the global economy. Recent data suggests that Hong Kong grew by a subdued pace in Q2 as well. We forecast growth of 0.5% q/q, up slightly from the 0.2% expansion recorded in Q1.

Looking ahead, with exports equivalent to 200% of GDP, trends in global demand will determine how Hong Kong performs. Although stronger US demand should help, a return to growth of 5% plus looks unlikely anytime soon given our view that growth in the euro-zone and China will disappoint. Overall, we expect Hong Kong to grow by just 2% this year, before picking up gradually over the next couple of years. (Gareth Leather)

Other Asia-Pacific

There are scheduled interest rate meetings this week in Indonesia (Thursday) and Sri Lanka (Friday). We believe rates will be left on hold in both countries. However, before the end of the year we expect to see further rate hikes in Indonesia, and another rate cut in Sri Lanka. India is due to report wholesale price inflation data for July on Wednesday. We expect inflation to have levelled off in y/y terms. (Gareth Leather)

Key Data and Events

Mon 1st  

    Gre

  GDP (Q2, Prov.)

            00.50

  Jpn

  GDP (Q2 Prov.)

            00.50

  Jpn

  Domestic CGPI (Jul)

            00.50

  Jpn

  Industrial Production (Jun Final)

            01.00

  Spr

  GDP (Q2 Final)

            06.00

  Est

  GDP (Q2)

            07.45

  Fra

  Current Account (Jun)

            08.00

  Den

  CPI (Jul)

            11.00

  Por

  CPI (Jul)

            19.00

  US

   Monthly Budget Statement (Jul)