Macro and Politics

* June Employment figures will be released @ 10:00 local time. The adjusted unemployment rate eased a tad from 8.6% to 8.4% in May. As per the broad-based unemployment calculations: The rate of composite measure of labor underutilization – including time related underemployment, potential labor force and unemployment – decreased slightly from 32.1% to 31% and remained elevated. Moreover, the combined rate of time-related underemployment and unemployment rose stood at 20.7%, while the combined rate of unemployment and potential labor force materialized at 20.2%. Despite the decline in May, we interpret the fact that the rate of composite measure of labor underutilization remains above 30% and hovers near record-high levels as a sign of continued cooling in the labor market. Rather than the headline unemployment rate, we focus more closely on the broad-based unemployment calculations, which we expect to remain elevated in the period ahead.

*TURKSTAT will release July Economic Confidence Index @ 10:00 local time. The Economic Confidence Index recorded only a marginal increase in June, edging up from 96.65 to 96.71. It is worth recalling that the index had climbed to 100.8 in March, marking its highest level since June 2023 and surpassing the 100-threshold for the first time since March 2024. However, amid rising domestic political tensions and idiosyncratic concerns since March 19, the index has remained below the 100-threshold since April, indicating that perceptions regarding the overall economic outlook have continued to hover in pessimistic territory. According to the sub-components of the June data: the Consumer Confidence Index rose by 0.3% to 85.1, while the Real Sector Confidence Index declined by 0.2% to 98.4. The Services Confidence Index posted a 0.4% increase to 110.9, whereas the Retail Trade Confidence Index dropped by 2.5% to 108.5. Lastly, the Construction Confidence Index fell by 1.7% to 86.9 in June compared to the previous month.