2Q GDP flash: -0.2% q/q, -0.4% y/y

MNI survey median: -0.3% q/q, -0.5% y/y
MNI survey range: -0.4% to -0.1% q/q

1Q GDP: flat q/q, flat y/y (revised from -0.1% y/y)
4Q GDP: -0.3% q/q, +0.7% y/y
3Q GDP: +0.1% q/q, +1.3% y/y
-

PARIS (MNI) – The Eurozone economy contracted slightly less than
generally feared in 2Q, as moderate growth in some core countries partly
offset the ongoing slump in the southern periphery, Eurostat estimated
Tuesday.

The 0.2% quarterly GDP downturn left activity 0.4% lower on the
year. Most analysts had forecast a slightly steeper decline.

An upside risk to the consensus forecast was evident after positive
surprises in Germany and France. Germany posted a moderate 0.3%
quarterly gain, while France managed to hold activity nearly stable.

However, the remaining momentum of the Eurozone’s locomotive and a
few smaller economies was outweighed by declines in Spain (-0.4%), Italy
(-0.7%), Portugal (-1.2%), Belgium (-0.6%), Finland (-1.0%) and Cyprus
(-0.8%).

Quarterly GDP gains were also registered in the Netherlands and
Austria (both +0.2%), Estonia (+0.4%) and Slovakia (+0.7%).

As usual, Eurostat provided no information on GDP components with
its flash estimate. Available data point to weakness on the expenditure
side. Private consumption was no doubt again throttled by rising
unemployment and fiscal tightening, especially in peripheral countries.
Eurozone retail sales declined by 0.7% in 2Q.

Business investment was probably dampened again by excess
production capacity, dismal demand prospects and high borrowing rates in
much of the periphery. Eurozone industry output fell by 0.6% in 2Q,
while construction activity in April and May was down 0.2% from the 1Q
average, despite the recovery in Germany.

Imports of goods fell faster than exports in April and May in
nominal seasonally adjusted terms. While foreign trade weighed heavily
on activity in France, it remained a driver of German growth in 2Q.
Rising exports no doubt limited the contraction in bailout countries as
well.

Leading indicators for the Eurozone remain at weak levels at the
start of 3Q, pointing to a further contraction ahead. The factory PMI
fell to a 37-month low of 44.0 in July, while the services PMI remained
well below par at 47.9 after a 1.2-point recovery since May.

Fiscal tightening, rising unemployment and subdued wage gains amid
still high inflation are a recipe for anemic consumption. Among the
larger economies, only in Germany and perhaps France are consumers
likely to be any better off in coming months, which would accentuate the
growing divergence across Eurozone economies.

Despite the depreciation of the euro, extended recessions can be
expected throughout most of the southern flank, which could pull down
some more northern neighbors into negative territory.

In spring the European Commission had forecast a full-year GDP
decline of 0.3% for the Eurozone, with negative growth in seven of 17
member states. In the core countries, growth would be subdued, as
Germany faces waning export demand from its neighbors and France could
see its consumption motor stall amid high unemployment and budget
tightening,

–Paris newsroom +331 4271 5540; email: ssandelius@mni-news.com

[TOPICS: MT$$$$,M$X$$$,M$XDS$,MTABLE]

June preliminary: -0.6% m/m, -2.1% y/y

MNI survey median: -0.6% m/m, -1.9% y/y
MNI survey range: -2.0% to +0.5% m/m

May: +0.9% m/m (revised from +0.6%)
April: -1.1% m/m (unrevised)
March: -0.1% m/m (unrevised)
February: +0.7% m/m (unrevised)
January: -0.2% m/m (unrevised)
–

FRANKFURT (MNI) – Industrial production in the Eurozone fell for
the fourth time this year, as declines in intermediate, capital and
consumer non-durable goods offset gains in energy and consumer durables,
Eurostat reported on Tuesday.

While May’s rebound was revised upwards to 0.9%, June’s 0.6% m/m
downturn still resulted in a 0.6% quarterly dip in output for 2Q,
deepening 1Q’s 0.5% decline and likely contributing to 2Q’s 0.2% GDP
fall. On the year, industrial production was down 2.1%.

Energy output recovered 0.4% on the month, narrowing the annual
shortfall to 0.4%.

Intermediate goods production fell 0.4% to bring the annual rate to
-3.7%. Capital goods output slipped 1.3% m/m, resulting in output down
0.9% y/y.

Consumer durables goods production continued to increase, gaining
0.2% on the month to slow the annual decline to 2.0%. Conversely,
consumer non-durable output fell back 0.7%, also resulting in an annual
dip of 2.0%.

Despite record low borrowing costs, austerity measures and falling
morale are likely to hamper domestic demand. While a depreciated euro
would support exports, orders from abroad should also suffer amid
subdued economic growth in the U.S. and Asia.

Recent survey data don’t suggest a recovery in the near term.
July’s manufacturing PMI fell to a 37-month low of 44.0, as output
contracted at its fastest pace in over three years and total new orders
slipped for the 14th consecutive month.

With inventories at long-term levels and order books thinning,
manufacturers revised down further their production expectations in
July, knocking the European Commission’s industrial sentiment figure to
its lowest level since 2009.

In Germany, the dip in manufacturing offset higher energy
production, knocking overall industrial output down 0.8% on the month
and 0.4% on the year. With new orders down 1.7% in June, the trough in
production may not yet have been reached. An Ifo institute survey showed
manufacturers’ production plans falling to their lowest level since
mid-2009.

French industrial output fell 0.1% in June following May’s sharp
decline to end 2.6% lower on the year. The trend in manufacturing is
likely to remain downward, as leading indicators are mostly bleak.
Insee’s surveys show producers quite pessimistic about orders and
near-term output prospects. The factory PMI sunk to a 38-month low of
43.4 in July.

The Bank of France’s latest survey, however, gave a more balanced
outlook, with potential short-term gains in chemicals, foods and most
high-tech branches partly offsetting declines elsewhere. Still, the
overall trend should remain downward.

Down 0.6%, the slide in Spanish industrial production was the 5th
monthly decline so far in 2012, pushing output down 6.3% on the year.
The decline was widespread, with capital, investment and consumer goods
production all down. Consumer durables could see an upturn as consumers
bring forward major purchasing plans to avoid the upcoming VAT hike.
However, with unemployment still rising and demand subdued, the rebound
will likely be brief.

In Italy, output fell 1.4% on the month and 8.2% on the year. July
brought little improvement, with the PMI pointing to falling output and
orders. As in Spain, labour developments in Italy do not bode well for a
sustained recovery in production. With the recession extending itself to
its fourth quarter, 3Q is certainly off to a poor start.

Among the smaller Eurozone states, the sharpest monthly fall was
noted in Portugal (-4.4%), followed by Estonia (-3.9%) and Finland
(-1.1%). Conversely, Ireland (+9.5%) led the way in gains, followed by
Slovenia (+2.8%) and Luxembourg (+2.2%). Up-to-date figures for Belgium,
Cyprus, Austria and Slovakia were not available.

– Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@mni-news.com –

[TOPICS: M$XDS$,MT$$$$,M$X$$$]

EMU DATA: 2q12 flash real GDP -0.2% q/q, -0.4% y/y
– EMU 2q flash GDP above MNI median fcasts(-0.3% q/q,-0.5% y/y)
– EMU 1q real GDP unrevised unch q/q, unrev unch y/y
– See MNI MainWire for details

EMU DATA: June industry output sa -0.6% m/m, wda -2.1% y/y
– EMU June industry output m/m matches MNI median fcast
– EMU May ind output rev up +0.9% m/m, -2.6% y/y (+0.6%,-2.8%)
– EMU 2q industry output -0.6% q/q; 1q -0.5%; 4q -2.1%
– EMU June 3mm avg (April-June:mar-May) -0.3% after May -0.1%
– Please see MNI Mainwire for further details

In line with expectations after last readings of flat, and -0.1% y/y

Eurozone June Industrial output -0.6%m/m, -2.1% m/m, pretty in line with expectations of -0.7 and -2.2%,

May IP revised up to +0.9% m/m from +0.6%, and -2.6% from -2.8% y/y

Demonstrably weaker than Reuter’s median forecast of -19.6.

ZEW says:

• Indicator decline signals analysts expect German economy to cool throughout coming 6 months
• Export sectors especially may be affected

UK DATA: Jul CPI +0.1 % m/m; +2.6% y/y vs Jun +2.4% y/y
————————————————————————
CPI inflation rose unexpectedly in July, driven higher by higher
transport prices and clothing and footwear. The figures wrong-footed
analysts and will be met with disappointment from markets, although it
is unlikely to herald a renewed upward trend in inflation. Some of the
increase was due to clothing/footwear where record discounting last
month meant the usual July price cutting was far less aggressive than
usual. CPI rose 0.1% m/m and 2.6% y/y, up from 2.4% in Jun. Analysts had
forecast a 0.1% decline m/m and rise of 2.3% y/y. Typically clothing and
footwear sales fall sharply in July due to the summer sales, but this
year the fall was less aggressive as sales had been brought forward to
June. There was also a large upward impact from transport which added
0.08 percentage point to CPI inflation and 0.17 percentage point to the
m/m change with airfares rising sharply, possibly due to the Olympics.

-Jun House Prices +0.5% m/m; +2.3% y/y

LONDON (MNI) – House prices rose on the month in June, with all
types of housing pushing prices higher, figures released by National
Statistics showed Tuesday.

House prices rose 0.5% between May and June on a seasonally
adjusted basis and were up 2.3% on the year, the same annaul rise as in
May.

Pre-owned dwelling prices were up 0.6% on the month, while new
dwellings rose 0.2%. Prices paid by first time buyers increased by 0.3%
and former owner occupier prices rose 0.6%.

The latest survey from RICS showed house prices falling in July
with surveyors expecting them to fall further over the coming months.

-London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

[TOPICS: M$B$$$,MABDS$]

UK DATA: UK JUL CPI +0.1% M/M; +2.6% Y/Y VS JUN +2.4% Y/Y

-Jul CPI +0.1 % m/m; +2.6% y/y vs Jun +2.4% y/y;

LONDON (MNI) – Consumer price inflation rose unexpectedly in July,
driven up by higher transport prices and clothing and footwear, figures
released by National Statistics showed Tuesday.

The figures wrong-footed analysts and will be met with
disappointment from markets, although it is unlikely to herald a renewed
upward trend in inflation. Some of the increase was due to clothing and
footwear where record discounting last month meant the usual July price
cutting was far less aggressive than usual and a large rise in air fares
may have been temporarily boosted by the Olympics.

Consumer prices rose 0.1% on the month in July and rose 2.6% on the
year, up from 2.4% in June. Analysts had expected to see a 0.1% decline
on the month and rise of 2.3% on the year.

Typically clothing and footwear sales fall sharply in July due to
the summer sales, but this year the fall was less aggressive as sales
had been brought forward to June. The fall of 2.6% between June and July
was the smallest decline on record. This effect pushed CPI inflation up
by 0.05 percentage point.

There was also a large upward impact from transport which added
0.08 percentage point to CPI inflation and 0.17 percentage point to the
change between June and July. The largest upward impact came from
airfares, where prices rose 21.7% on the month. This was mainly due to
flights to Europe and long-haul. National Statistics said they didn’t
know whether the Olympics had pushed up air fares in July but noted that
domestic flight prices had remained stable.

Core inflation, which excludes energy, food, alcoholic beverages
and tobacco rose to 2.3% in July from 2.1% in June.

The latest Inflation Report from the Bank of England showed the two
year ahead inflation forecast was nudged up slightly, to around 1.7%,
but still markedly below the 2% target. In his opening statement BOE
Governor Mervyn King said inflation was likely to be “around or a little
below target for much of the forecast period” but he rejected the view
further stimulus was needed now.

“Towards the end of the forecast horizon the balance of risks to
inflation around the 2% target is broadly balanced. That in itself does
not suggest an urgent need for further action,” King said.

-London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

[TOPICS: MT$$$$,M$B$$$,MABDS$]

UK DATA: Jun House Prices +0.5% m/m; +2.3% y/y
————————————————————————
House prices rose on the month in June, with all types of housing
pushing prices higher, figures released by National Statistics showed
Tuesday. House prices rose 0.5% between May and June on a seasonally
adjusted basis and were up 2.3% on the year, the same annaul rise as in
May. Pre-owned dwelling prices were up 0.6% on the month, while new
dwellings rose 0.2%. Prices paid by first time buyers increased by 0.3%
and former owner occupier prices rose 0.6%.

Sharply up from -0.4% m/m and +2.4% y/y in June and expectations of 2.3% y/y.; First rise since March with the ONS reported that airfares leapt 21.7% on the month

Cable’s getting a mild boost on the release to around 1.5725  as EUR/GBP tumbles back to the low 0.7870′s from  0.7885 highs

July RPI rose +0.1% m/m, +3.2 % y/y  (above forecasts of 2.8% y/y)

Market’s expecting a small improvement on the m/m from -0.4% in June with little if any change on the y/y reading.

Cable’s currently around 1.5708 from Asian session lows around 1.5675, but lagging the EUR/USD as the EUR/GBP chews through thick offers in front of 0.7900.

data released in couple of mins….

Why does everything move so bloody slooooooooowly these days?

Like pulling teeth.

EUR/USD sits at 1.2380, well touted sell orders at 1.2380/00 so far proving barrier to accelerated upside.

I DEMAND A MOVE OVER 1.2400!!!

No move over 1.2400 today and I’m taking the rest of the week off!!!

FRANKFURT (MNI) – Germany’s Constitutional Court sees no reason to
delay its planned September 12 ruling on the ESM rescue fund and EU
fiscal pact, despite a new lawsuit filed with the court seeking a delay,
a spokeswoman for the court in Karlsruhe confirmed to MNI Tuesday.

A group led by German Professor Markus Kerber has filed a lawsuit
claiming the Constitutional Court must delay its ruling because of a
similar case filed before the European Court of Justice in Luxembourg.

But the German court argues its decision on September 12 involves
only a ruling on a temporary injunction sought against the ESM and
fiscal pact, not a final ruling on the two European mechanisms. A final
ruling would have to take the European Court of Justice case into
account.

“We have received the injunction sought by Professor Kerber,” the
court’s spokeswoman said. “We do not consider it appropriate to delay
the date from the 12 (September), so in all likelihood it will stay.”

– Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com –

[TOPICS: M$X$$$,M$$EC$,MGX$$$,MT$$$$,M$G$$$,M$$CR$]

Up from 365 bln in June.

It’s a record!!!!   (kinda record you don’t really want)

That’s 33% of all gross ECB borrowing in July.

Don’t eva say I don’t listen to our readers…..

By popular demand!!! we have a USD/JPY poll.

We sit at 78.55.

What’ll we see first 77.50 or 79.50?

Reason/s for choice appreciated, but not obligatory.

To those clever trevors who picked 1.2385 in yesterdays’ EUR/USD poll.

So we might as well have another one

We’re at 1.2380.

What’ll we see first 1.2280 or 1.2480?

Reasoning/s welcome, but not obligatory.

FRANKFURT (MNI) – Bundesbank Board member Andreas Dombret warned of
rising Keynesian tendencies at the International Monetary Fund that do
not pay sufficient attention to the medium term and are crowding out
private investment, according to comments published in two German
newspapers Tuesday.

“In the past, with its credit financing, the fund acted as a
catalyst for private capital in a country,” Dombret said in comments to
the Frankfurter Allgemeine Zeitung. “With the expansion of credit
volumes, there is a danger because of its senior creditor status that
private creditors will be forced out by the IMF.”

The IMF’s readiness to accept and recommend expansive and
anti-cyclical monetary and fiscal policies appears to be on the rise,
Dombret also told the Boersen Zeitung in an interview.

“In my view this [tendency] bears risks – risks of medium-term
dislocations such as price bubbles or excessive debt that sometimes are
not sufficiently observed,” Dombret said.

One must also bear in mind that expansive fiscal policies that
further increase indebtedness of countries under IMF programs boost
financial risks for the fund and its net contributors, Dombret warned.

The comments come on the 60th anniversary of Germany joining the
IMF and World Bank.

–Frankfurt newsroom +49 69 72 01 42; e-mail frankfurt@mni-news.com

[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]

Really very little change in the market on these…

AUD/USD: 1.0650

GBP/USD:  1.5800

USD/JPY: 77.75, 77.50

USD/CAD: 0.9900