Eurozone indicators to be released in the coming week are expected to show an increase in July wholesale prices and a slide in retail sales, as well as stronger industrial output in the bloc's largest economy, Germany, economists said.
Producer prices in the 12-nation eurozone are expected to rise 0.5 percent in July from June in response to higher oil prices. The increase in the producer price index had slowed to 0.2 percent in June as oil prices dipped temporarily, but the renewed rise in energy costs will keep producer price inflation high in the months ahead, economists said. The year-on-year gain in the PPI is expected to be unchanged at 5.8 percent in July.
Eurozone retail sales are likely to have recorded a 0.4 percent month-on-month fall in July, wiping out most of the 0.5 percent gain recorded in June.
German retail sales fell 1.5 percent in July as consumer spending declined following the close of the World Cup competition July 9.
"We expect the fall on the month to have been led by lower retail sales in Germany, partially offset by modest increases in the other large euro area countries," said Nick Matthews of Barclays Capital.
He said the July performance suggested that private consumption growth would slow slightly in the third quarter. The year-on-year rise in retail sales is expected to ease to 1.4 percent from 1.5 percent.
In Germany, manufacturing orders are projected to show a rebound of 1.3 percent in July in a partial correction of declines in the previous two months. Orders fell 1.5 percent in May and 0.5 percent in June.
"With business confidence still extremely elevated, we think the underlying trend in orders is still upwards," Credit Suisse said. German industrial production is also likely to show a recovery, rising 0.5 percent in July after the 0.4 percent decline seen in June.
Manufacturing output is likely to benefit from robust automobile production and a recovery from output losses during the World Cup, economists said. The year-on-year growth in output is expected to slow to 3.9 percent from 4.6 percent on a working days adjusted basis.
Germany's trade surplus is meanwhile expected to fall to 12.6 billion euros (16 billion dollars) in unadjusted terms in July from 13.3 billion the month before. But it will be slightly higher once seasonal and calendar effects are taken into account, economists said.
The adjusted surplus is expected to rise to 12.5 billion euros from 11.9 billion. The current account surplus is likely to narrow to 8.2 billion euros from 10.1 billion in June.
The services sector in the eurozone is seen as weakening as a whole in August as well as in France and Italy. The expected decline in the eurozone purchasing managers' index (PMI) for the services sector is attributed to a downturn in the manufacturing PMI and business confidence surveys.
Economists expect the services PMI to decline to 57.5 in August from 57.9 in July and a six-year record high of 60.7 in June.
"Measures of business confidence have started to roll over across the euro area, so we anticipate a small drop. That would still leave the level of the services ... PMI consistent with strong output growth," Credit Suisse economists said.
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