Daily Economic Outlook: 7th July, 2015

Following yesterday's meeting between Angela Merkel and Francois Hollande on the implications of the Greek referendum result, an emergency meeting of Euro-area finance ministers is scheduled for noon today followed by a Euro-area leaders' summit at 5pm.

In terms of data, today's domestic highlight is the industrial production release for May. Last month saw a stronger-than-expected 0.4% m/m increase in output. This reflected a 5.6% rise in mining and quarrying, itself overwhelmingly driven by an 8.7% climb in oil and gas output. However, this surge in extractive sector activity stands in stark contrast to manufacturing which fell by 0.4% on the month. Overall industrial output growth is expected to soften by 0.2% on the back of an anticipated sharp reversal in the strength of oil and gas output over the last few months, estimates Lloyds Bank. Meanwhile, both the recent strength of sterling and survey evidence point to a tepid 0.1% pickup in manufacturing. 

German industrial production for May is also released this morning. Output rose by 0.9% m/m in April, which was the strongest print since December last year. However, amidst signs that the Greek negotiations have served as a headwind to broader euro area sentiment and activity, a slowdown to 0.1%m/m is anticipated, says Lloyds Bank. 

After some erratic moves in February and March on the back of the Q1 labour dispute at West Coast ports, the April US trade balance of -$40.9bn  was close to its average of the last two years. This afternoon's release is expected to show a small improvement to -$40.5bn, adds Lloyds Bank.