Global activity has been tracking on the soft side of forecasts for the last month. Econoday’s Relative Performance Index (RPI) ended the week at minus 9 to indicate that global data, on net, are coming in at the low end of Econoday’s consensus ranges. This points to a bias for policy accommodation.
Eurozone economic data are increasingly underperforming expectations, at a deeply negative minus 41 on the RPI which if extended over the next several weeks would build chatter for a back-to-back rate cut at the ECB’s July 18 meeting, a cut that seemed improbable just a couple of weeks ago. June’s harmonised inflation flash on July 2 will be critical for rate expectations.
The three largest economies within the Eurozone are all underperforming: Germany at minus 21, France at minus 26, and Italy at minus 12. And all these scores are being propped up by as-expected inflation data excluding which the Eurozone’s RPI less prices (RPI-P) falls to minus 48 with Germany’s RPI-P at minus 32.
The UK is also underperforming at minus 25 on the RPI. Yet given the July 4 election and likely reforming of the government, the Bank of England, which next meets on a pleasantly distant August 1, isn’t likely to face any immediate rate-cut heat.
Other countries are performing within expectations, at scores between plus 10 and minus 10 to indicate that recent data, on net, are coming within Econoday’s consensus ranges. China’s mixed set of May data leaves this country’s score at plus 7 with Canada at plus 8 and Japan just marginally on the weak side at minus 11. And data from the US are virtually matching Econoday’s consensus medians, at minus 1 overall and also minus 1 when excluding prices.