Events to Watch: Eurozone GDP, US Retail Sales

US Retail Sales - July: US retail sales probably rose +0.5% mom in July after a gain of +0.6% in the previous month. Leading the growth was increase in auto sales as driven by the ‘cash for clunkers' program, although surge in gasoline price damped sales in gas station which partly offset the overall headline growth. Unit auto sales increased +15% to annualized rate of 11.2M. This should have translated to 3-4% increase in retail auto sales. Core retail sales, excluding auto dealers, gas and building materials, should have risen +0.3% after declining for 4 straight months.

Eurozone GDP - 2Q09: Eurozone GDP should have contracted -0.4% qoq in 2Q09, significantly moderated from the -2.5% decline in 1Q09 as driven by higher government spending. Contraction in investment is also expected to have slowed down given improved macro-economic outlook and better sentiment data released in recent months. However, the biggest component of economic growth - consumption, might have remained depressed by weak employment conditions. On annual basis, the gauge is anticipated to have declined -5% in 2Q09, compared with -4.9% a quarter ago.

Geographically, northern Europe would have shown improvement while the south would have dragged down the headline GDP data. In Germany, 2Q GDP should have declined -0.2% after a sharp fall of -3.8% in the prior quarter as driven by positive growths from net trades. In France, GDP is expected to have declined -0.2% qoq, compared with -1.2% in 1Q09. Car production picked up rapidly after the car rebate programs have been implemented in France and Germany. This should have offered some helped to the economy. In Italy, report showed that GDP contracted -0.5% qoq, compared with -9.7% in 1Q.