Intesa Sanpaolo : The Popular Party is ahead in the polls but is unlikely to reach an absolute majority of seats in Congress, making a post-electoral agreement necessary to form a government.
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Weekly Economic Monitor – 14. July 2023
Intesa Sanpaolo – Research Department
On 23 July, Spain will head to the polls . The most plausible scenarios include a return to the polls or a pact with the extreme right Vox. The results should not change the outlook for the Spanish economy, which should continue to outperform the rest of the Eurozone. However, as Spain chairs the EU Council until the end of the year, the possible lack of a government, or a very weak one, could hinder the process of reaching an agreement on fiscal governance reform.
United States: the lower-than-expected data on employment growth and inflation in June do not appear to jeopardise the new 25bp Fed rate hike expected on 26 July, but significantly reduce the likelihood of a subsequent rise.
The week’s market movers
The coming week in the euro area looks poor in terms of relevant data. July confidence surveys are expected to show a correction in manufacturing morale in France and consumer morale in the Eurozone after three months of recovery, confirming a picture of weakening economic activity. The final estimates of consumer prices in June will confirm the decline of inflation in Italy and the Eurozone. Production in construction is expected to show a modest recovery in May after declining in the previous two months.
In the United States , data due out this week will provide information on the trend of activity in a number of sectors. The first set of surveys on the manufacturing sector in July should confirm the recessive phase under way. June retail sales are forecast to strengthen modestly, fuelled by the auto sector, whereas industrial output should remain essentially stable. On the residential housing market, June should bring a retracement of both existing home sales and housing starts, after several months of upside surprises.
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