Daily Economic Outlook: 21 August, 2015

The euro area PMIs have held relatively firm in recent months, even as Greek concerns intensified. In fact, despite modest declines in both the manufacturing and services PMIs for July, their respective levels remain broadly unchanged from the averages recorded in Q2. For August, market expectations are for both indices to be broadly unchanged on the month (manufacturing, 52.2 and services, 54.0), which would raise the likelihood of another firm quarter of output growth in the euro area in Q3, states Lloyds Bank. As usual, French and German figures will be released ahead of the euro area.    

Domestically, an update on the health of the UK's public finances provides the key focus for today. July is usually the second highest month for receipts during the financial year, with many firms paying the first of four corporation tax payments on their profits, and the second payment on account for personal self-assessment liabilities for the previous financial year. 

Despite the revised projections in the July 2015 Budget setting a more ambitious timetable for the improvement of the public finances in 2015/16 relative to the March projections, outturns for the first three months are already a little ahead of plan for the full financial year. Nevertheless, revisions over the course of the year can change the picture quite dramatically, leading even detailed forecasts astray. For July, a net repayment of £1.0bn on the ex banks measure is expected, an improvement on net borrowing of £0.1bn in 2014/15, and a repayment of £1.8bn on the headline measure, says Lloyds Bank.