Good morning! Here's what you need to know:
Eurozone Inflation Inches To Zero. Consumer prices inflation in the 18-country eurozone slowed to a five-year low of 0.3% in August, a slight tick down from 0.4% in July. "Euro-area inflation fell closer to zero in August," said Bloomberg economists Maxime Sbaihi and Niraj Shah. "The releases add weight to speculation the European Central Bank could announce further monetary stimulus as soon as next week."
Eurozone Unemployment Still Stinks. The unemployment rate was unchanged at 11.5% in July. "Joblessness remains elevated in the euro area, but the recent signs of improvement should not be ignored," said Pantheon Macroeconomics' Claus Vistesen. "The unemployment rate in the eurozone has declined steadily this year, and is down 0.5% from a peak in 2013. This is significant, but the main story is that overall growth is still too low to make a meaningful dent in unemployment."
Italy Is In Deflation. Italy revealed consumer prices actually fell 0.2% year-over-year in August, a sharp deterioration from 0.0% in July. In other words, Italy is in deflation.
German Retail Sales Tumble. Retail sales in Europe's largest economy plunged 1.4% in July, missing economists' expectations for a modest 0.1% increase. This was the biggest month-over-month decline since December. "The monthly data are extremely volatile, and we should expect a reversal next month, but with German retail sales down 0.42% quarter-on-quarter in Q2, this is hardly the best start to the third quarter," said Pantheon's Vistesen.
Abenomics Is Failing Japan. The world's third largest economy released a slew of disappointing data. Household spending plunged by 5.9% in July, which was worse than the 2.9% decline expected. The unemployment rate unexpectedly ticked up to 3.8% in July; economists were expecting it to be unchanged at 3.7%. Industrial production climbed by just 0.2% in July, which was much more modest than the 1.0% expected.
Markets Are Up Ahead Of The 3-Day Weekend. Asia closed mixed with Japan's Nikkei down 0.2% and Hong Kong's Hang Seng up a fraction of a percent. Europe is modestly in the green with Britain's FTSE up 0.2%, France's CAC 40 up 0.2% and Germany's DAX up 0.2%. U.S. futures are up with Dow futures up 37 points and S&P futures up 5 points.
Get Ready For U.S. Data. There are three big economic reports coming today, starting with the July personal income and spending report at 8:30 a.m. ET. Economists estimate income jumped by 0.3% while spending climbed by 0.2%. "Weekly earnings for production and nonsupervisory employees from the BLS employment report increased in July," noted Nomura economists. "As for personal spending, core retail sales hit a soft patch, increasing by only 0.1% in July as most categories showed a decline or lackluster growth. Moreover, energy spending likely slowed in July as the weather was more moderate than usual, leading to less demand for air conditioning."
A Midwest Economic Update. The Chicago Purchasing Managers index report will be released at 9:45 a.m. ET. Economists estimate this regional activity index jumped to 56.5 in August from 52.6 in July. "This would be a rebound after a sharp fall in July and consistent with the upward move in the Philadelphia Fed index in August," said Barclays economists.
American Confidence. The University of Michigan's consumer confidence report will be released at 9:55 a.m. ET. Economists estimate this index of sentiment to registered at 80.0 in August, down from 81.8 in July but up from a preliminary estimate of 79.2. " If [79.2] sustained for the month as a whole, this would be the lowest level on the consumer sentiment index since November 2013," noted Credit Suisse economists. "But if equity markets continue to recover from their early-month swoon and geopolitical fears stabilize, we may see a slightly higher final sentiment reading for August. Lower gasoline prices probably are still helping to boost sentiment, as well."
Malaysia Airlines Is Getting Smaller. "Malaysia Airlines will cut 30% of its workforceas part of a restructuring that will cost 6 billion ringgit ($1.90 billion), majority investor Khazanah Nasional said on Friday," reported Reuters' Al-Zaquan Hamzah. "Khazanah said the carrier will trim its staff by 6,000 to 14,000 as it seeks to stem long-running losses worsened by two aircraft disasters this year."