Due out in the Euro area are the April confidence surveys (EU Comm., Bank of Belgium business
confidence, PMI and INSEE). The indicators should show a slight dip in sentiment, still leaving it
historically high and in expansionary territory. ....
– The EU Commission index of consumer confidence might ease to -11 in April, remaining slightly above the long-term mean calculated since 1985 (-12). According to the GfK survey, household confidence slipped in Germany, while in the peripheral countries the adoption of new tightening measures might further dent consumer sentiment.
– The NAHB index should be steady at 17 in April, as in March (when the first improvement came after four months at 16). In last month’s survey, current sales were steady (at 17), and future sales rose to 27 from 25.
– The composite PMI for the Euro area might ease to 57.3 in April from 57.6 in March. The dip in sentiment should be due to a slightly gloomier view both in manufacturing (on fears of a slowdown in global demand and a stronger euro) – we estimate 57.1 vs. 57.5 – and in services (57 vs. 57.2). The composite index would still be comfortably expansionary, and in fact would point to a marked acceleration in GDP (in the area 1% qoq).
– New starts should rise to 515k in March from 479k in February, returning them to the levels seen for most of the second half of 2010. Starts were extremely volatile in the first two months of the year due to the weather. In February, sites fell by 22.5% mom to 479k, just above the all-time series low (477k in April 2009). Building permits are expected to rise to 540k in March from 534k in February, still close to the bottom end (544k) of the range seen since September 2010.
– Sales of existing homes are expected to grow to 5.1M units ann. in March from 4.88M in February. February witnessed a plunge in sales of -9.8% mom, partly due to the weather. The sector remains weak: pending home sales were down in December and January and expectations of an increase in actual sales are based on the modest jump in pending home sales in February. Home prices are falling again year-on-year in both average and median terms; the negative trend should not change in the coming months.
Thursday 21 April
– Germany. The IFO index might slip slightly for the second straight month in April, easing to 110.7 from 111.1 in March. The level is still close to the series’ 20-year highs. This month too should show a dip in expectations (to 105.4 from 106.5) and a further improvement in the view of the present situation (116.1 vs. 115.8). The level of the IFO index remains consistent with an year-on-year acceleration in German GDP of around 5%.
– The Bank of Belgium business confidence index might be little changed in April, at 6.1 vs. 6.2 in March. The index, seen as a leading indicator of the industrial cycle in Germany (the largest outlet market for Belgian manufacturers), is not far off the series’ over-30-year highs.
– The April Philadelphia Fed index should correct from the high recorded in March (43.4, highest since January 1984). The forecast is for the index to fall to 37.5, still close to the 2004 highs like the ISM. The April survey should show a correction in new orders from 40.3 in April (highest since November 1983), along with further rises in prices paid from 63.8 in March.
Expectations six months forward should also fall from 63 in March. The signals from manufacturing in this quarter should point to growth stabilising/slowing owing to the transitory effects of the earthquake in Japan.
– France. Manufacturing business confidence might be unchanged at 109 in April, well above its long-term average (100). The new orders component could retrace after last month’s jump (to -5 from -17). The levels of the production and selling price sub-indices should remain high.
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