Need To Know News

U.K. August CBI manufacturing orders index slipped to -13, worse than our survey median estimate for -11 and compared to -8 in July. This pushed the index back to its April level. A breakdown of the survey shows that export orders fell to -9 from -7, while the output expectation index hit a near 7-year low of -13 from -7 in June.

Domestic price expectations abated slightly, to +31 from +34, probably on the back of weaker commodity prices over the past month. Overall, data adds to evidence of a continued slowdown to the sector, where a weaker Sterling has yet to boost exports.

Construction in the 15-nation Eurozone shrank 0.6%  in June from May, wth Spain especially hard hit, according to Eurostat.

And construction in Germany fell 2.1%, well ahead of the overall Eurozone figure.

U.K. July M4 money growth remained robust, up 0.9% m/m and 11.2% y/y. This was still lower than 1.8% and 11.4% respectively in June but above our survey median for 11.0% y/y, and should add to concerns over continued upside risk to inflation. Indeed, the BoE noted in the August minutes that money and credit growth was only of the key factors to watch near-term to determine the risks to inflation.

U.K. July public finances came in slightly better than expected. Net cash repayment to total Gbp 12.63 bln compared to a median estimate for 10.8 bln, and net cash requirement in June was revised down marginally to 15.34 bln from 15.46 bln. Net lending hit Gbp 4.84 bln in July (median 4.3 bln) but the June net borrowing reading was revised up to 9.59 bln from 9.16 bln. Overall, although slightly better figures than expected for July, U.K. public finances are still in a poor state and are likely to deteriorate further as economic growth slows.

German investor  serntiment on the outlook for Europe’s largest economy bonced back by a ltitle more than expetced last month, according to figures from the ZEW.

The gauge of expectations rose to minus 55.5 from July’s record low of minus 63.9.

A separate measure of current conditions fell to minus 9.2 from 17 in the previous month, below the consensus forecast of 10.0 

The ZEW says the improvment of the economic sentiment signals there is only limited fear about an economic downturn.

Financial market experts reckon with a weaker economic devlepment but not a recession, says ZEW president Wolfgang Franz.

The recent decline in GDP is the cause of the current economic situation indicator.

Surging energy prices pushed German producer price growth to record levels in July, with the annual inflation rate hitting the highest level since Oct-81. The m-o-m rate of 2.0% shattered the 0.7% estimate, and was more than double the 0.9% reading in June. The annual inflation rate of 8.9% exceeded both the 7.6% forecast and June’s 6.7%. PPI ex-energy grew at an annual rate of 3.6%, which compares to 3.0% in June.

German producer price inflation is expected to have slowed to 0.7% in July compared to 0.9% the month prior. The annual rate of price growth is forecast at 7.6% vs. 6.7% in June, which was at a 26yr high.

PPI beat expectations last time around, and it could happen again. Commodity prices were high in the period. Plus, core PPI has been rising, too. In June, PPI ex-energy was up 3% y-o-y, an increase from 2.9% in May. The data will be released at 6a.m. GMT and broadcast live on Need to Know News’ Scream Audio.

Economic sentiment in Europe’s largest economy as measured by the ZEW economics institute is expected to rise slightly to -62.0 in August from the all-time low -63.9 reading last month. The current conditions indicator is seen falling to 10 this month compared to the 2yr low of 17 in July.

Even though sentiment is seen improving a bit, it is little consolation since analysts and economists polled by the ZEW have never been so pessimistic. They had their reasons last month: The ECB raised its headline interest rate by 25bps to 4.25%, and Berling reported industrial orders had fallen for the sixth straight month.

Not much has changed — the rate’s the same, and industrial orders plunged 2.9% m-o-m in June to record their seventh straight decline. For a country that lives from manufacturing, the news could not have been much worse, and the situtation is not expected to improve soon. The German Economics Ministry said June showed a continuation of the decline in orders over the past few months, and both foreign and domestic demand point downward.

Recent euro weakness should help exporters, and easing oil prices are lowering production costs, but these shifts may not be enough to significantly improve the outlook for the German economy considering declining orders. A number of observers have cut their German growth expectations over the past few weeks, with Deutsche Bank seeing 2009 as nearly flat. However, German Q2 GDP growth fell to only -0.5% q-o-q, which beat expectations. Need to Know News’ Scream Audio will broadcast the survey results live at 11 a.m GMT Tuesday.

Swiss June retail sales rose just 0.7% y/y in real terms, versus 7.4% in May, far below the Reuters median estimate of 3.2%. However, Swiss retail sales are notoriously volatile and the 3m y/y trend rate actually rose to 3.5% from 2.4% in May, helped by strong May figures. Meanwhile, when adjusted for the number of shopping days, sales were up 4.7% y/y, after a 7.4% in May. Overall, still relatively healthy figures, although we are likely to see weaker retail sales figures ahead as consumer demand falters on the back of the credit crunch and weaker confidence.