ECONOMIC DATA PREVIEW 17 JUL 09

Watch in the United-States the release of the housing starts and building permits for June due at 13.30 GMT, housing starts are expected to drop very slightly and building permits are expected to improve, showing that the house market recovery is ongoing but very progressively.

Watch in the Euro zone the release of the trade balance for May due at 10.00 GMT. Euro zone trade deficit is expected to turn into a trade surplus. Nevertheless it do not look as good as it seems as this improvement should be lead by a sharp drop of imports due to the global economic downturn./JB


ECONOMY

United-States: Initial jobless claims and continuing claims declined significantly
The number of Americans filling claims for unemployment dropped for the third consecutive time from 569 000 to 522 000
(forecast 553 000) July 11 th the lowest level since the first week of January 2009. Meanwhile after reaching a new historical high at 6 915 000 June 26 th, the number of people collecting unemployment insurance plunged by a record of 642 000 to reach 6 273 000 the lowest level since April 10 th. These encouraging data showed that the labour market is progressively recovering. Indeed if 60% of the lay off are due to the contraction of the activity the remaining 40 % reflected anticipated lay off due to a fear minding. Consequently we see that companies seems to have a more realistic vision of the outlook. Nevertheless its important to remain cautious about these figures and to wait for the unemployment report which will be released Friday 24 th.

France: Consumer price index reached a new historical low in June
France’s consumer price index dropped from +0.2% in April to +0.1% (forecast +0.3%) in June led by the slight drop of oil. From a year ago French inflation fell for a second consecutive month from -0.3% YoY to -0.5%% as energy cost declined. Indeed crude oil is trading around $60 a barrel meaning less than half the price of a year ago creating “negative base effects” as in June 2008 prices rose by 0.4% versus 0.1% in June 2009 as mentioned previously. Negative year on year inflation reflecting the gap between global demand and global offer and the drop of energy cost from a year ago is the worst situation in economy. Indeed its generate a rise a bankruptcies and of unemployment cutting the purchase power and the demand increasing the deflation as a vicious circle. Hopefully this deflation situation will not last as the “negative base effect” should end by the end of this summer.