European Economic Data Outlook 6-June-2006

From XFN-Asia

EURO ZONE

The purchasing managers index for the services sector is expected to continue to edge higher in May, matching the small gain recorded in the manufacturing PMI. The services PMI is expected to edge up to 58.5 from a 5-1/2 year high of 58.3 in April. A further gain in the services PMI will strengthen the case for the European Central Bank to raise interest rates on Thursday. Credit Suisse economists said services PMI data have indicated much stronger growth rates than shown by the official GDP numbers, and if this strength is sustained in May, this would point to solid second quarter growth. However, HSBC economists said the services PMI is probably very close to its peak.

GERMANY

Germany's services PMI is expected to edge higher, in line with other positive survey data, and is seen rising to 57.6 in May from 57.3 in April.

FRANCE

The French services PMI is projected to firm slightly, in line with the general euro zone trend. The indicator is expected to edge up to 59.6 in May from 59.4 in April.

ITALY

Italy may be left out of the continuing advance in euro zone PMI readings, with its services PMI figure expected to slip to 59.4 in May from 59.6 in April. This would match a similar downturn in the country's manufacturing PMI, economists said.

UK

The British Retail Consortium's latest retail sales monitor is expected to show like-for-like retail sales rose by 2.5 pct in May from the same month a year earlier and after a 6.8 pct jump in April.

April's sharp gains were largely because Easter fell in the month, and though sales are expected to have slowed in May, the trend "has clearly improved and is consistent with reasonable growth on the high street," HSBC analysts said.services PMI is projected to firm slightly, in line with the general euro zone trend. The indicator is expected to edge up to 59.6 in May from 59.4 in April.