Euro area consumer confidence likely to have recovered in August

Euro area consumer confidence, an indicator released by the European Commission, is likely to have recovered in August. The indicator is based of questions about the expectations of unemployment, the general economic situation, savings and household’s financial situation in the next 12 months. The August figure is expected to have come in a bit firmer at -7.1, a rise from July’s slight blip, said Societe Generale in a research report.

The stronger index is possibly due to the Brexit outcome or the terrorist attacks in Germany and France, added Societe Generale. The indicator is likely to continue improving gradually in the future, with disposable income stimulated by reasonable wage growth and job creation. Any drag would likely come from policy uncertainty.

Meanwhile, PMIs in the euro area were resilient to the Brexit shock, with the composite figure actually rising from 53.1 in June to 53.2 in July.

“We expect a similar figure in August which would be consistent with GDP growth of slightly below 0.4 percent qoq in 3Q16”, noted Societe Generale.

Looking at individual member nations, French PMIs are likely to gain. There is room for rebound in the manufacturing figure. The improvement in the overall figure might be countered by lower numbers in Germany, where a slight slowdown is expected in line with global trends in manufacturing last month.