In the euro area, the macro calendar will complete the round of March survey data (German IFO, EU Commission survey, business and household confidence in Italy), which should confirm that pessimism is easing compared to recent months, with year-on-year inflation dropping slightly in March, despite monthly increases fuelled by energy costs…..
Monday 26 March
– Italy. We expect consumer confidence to drop back in March (to 93.5 from 94.2), after rebounding more than expected in February, due in part to renewed concerns over employment and price increases, especially on high-frequency goods. Household confidence remains close to the historical lows hit between December and January, and signal no recovery in consumption.
– Germany. The IFO index is expected to score its fifth consecutive monthly rise in March, to 110.4 from 109.6 February, in our estimation (vs. a long-term average of 100.7). The improvement will probably be driven by the future expectations component (to 103.7 from 102.3), as opposed to a drop in current situation assessments (to 117.3 from 117.5 in February). The latest data point to a possible recovery of the German economy in Q1 2012, after the -0.2% q/q GDP contraction recorded at the end of 2011.
Tuesday 27 March
– Conference Board consumer confidence should be down in March to 68, from 70.8, offsetting only in part the almost 9 point rise in February. Other surveys also showed corrections in March, mostly due to higher energy costs. In February, consumer confidence had risen sharply both in terms of current conditions (to 45 from 38.8), and of the expectations component (88 from 76.7). The marked rise in gasoline prices should lead to a stronger than expected contraction.
Wednesday 28 March
– Year-on-year M3 growth could accelerate to 2.7% in February, from 2.5% in January. The January rebound was aided by the removal of guaranteed interbank transactions carried out through central counterparts in the euro area at the end of the year, and incorporated only in part the initial impact of the first 36-month LTRO. It will be important to verify the trend in February of loans al private sector, which had dropped slightly in January; we believe it will take a while longer for the full impact of the non-conventional measures adopted by the ECB to express itself.
– Italy. Business confidence could rebound to 92 in March from 91.5 in February. Easing tensions tied to sovereign risk are expected to have fuelled expectations for an improvement in economic and credit conditions. In any case, business confidence remains below the long-term average (100.6) and a rebound would not justify particular optimism. However, confidence is also well off the lows reached in 2009 (71.1).
– Germany. Data from the Laender should be compatible with a 0.4% m/m rise in consumer prices in March, due by only one-tenth to the usual seasonal factors, and by three-tenths to higher energy prices. Inflation should level-off at 2.3%, both in terms of the national and harmonised rates. We expect the CPI to remain broadly stable in the months ahead (and to start dropping only as of the autumn).
– Durable goods orders are expected to recover in February, by +2.8% m/m, after dropping in January (-3.7% m/m). The figure excluding transport should also show a marked improvement, and is estimated at +2.2% m/m, from -3% m/m in January. The sharp contraction in January was due in part to the expiration of investment incentives, that had inflated data referred to the closing months of 2011. Civil aviation orders should recover almost all the January decline, supported by Boeing’s recovery. Data should also show a significant slowdown in the positive trend of inventories recorded in Q4 2011.
Thursday 29 March
– Germany. Unemployment may rise back marginally in March, to 6.9% from 6.8% the previous month (an all-time in the 20-year data series). It should be said that the unemployment rate based on ILO standards has already been rising back since January (by one-tenth of a point, to 5.8%). The jobless figure in March could prove stable (as was the case in February).
– The European Commission’s economic confidence index could show a further improvement in March (for the third consecutive month), to 95 from 94.4 in February. Based on the preliminary estimate, consumer confidence has improved to -19 from -20.3; business confidence could improve in the services sector (to zero) and change little in manufacturing (to -6). The level of the index remains compatible with an essentially stagnant euro area economy in the spring quarter.
– The third estimate of Q4 2011 GDP should come in at 3.2% q/q ann. vs. the second estimate of 3% q/q ann. The revision should mostly be due to consumption, with services leading the way. Fixed investments are also expected to prove stronger, in light of non-residential construction spending data, revised based on January data. Residential investments and net exports could be marginally revised downwards.
Friday 30 March
– France. Retail sales could rebound by 0.6% in February, from -0.4% m/m in January. The year-on-year arte will be little changed at -2.1% from -2.2% y/y. Vehicle registrations suggest a rebound in sales after the January decline. In any case, sales would be on course for a decline in Q1 2012, which could translate into a contraction of GDP.
– Euro area inflation is estimated to come in two-tenths of a point lower in March, at 2.5% y/y. Risks are skewed to the upside, in light of the further increases in fuel prices. Inflation may well stay above the ECB target throughout the year, driven primarily by energy cost tensions, and by higher tariffs and indirect taxes; in any case, the CPI net of the more volatile items will stay well below 2%.
– Italy. In March consumer prices should be up by 0.3% m/m in terms of the national rate, and by 2.1% m/m (due to the rebound in the prices of seasonal goods, after the temporary drop in January-February) at the EU harmonised level. As a result, year-on-year inflation would drop by one-tenth both at the national level (to 3.2% y/y) and in harmonised terms (to 3.3% y/y). The monthly trend was mostly affected by higher fuel prices (higher by 3% m/m on average in the month, on top of the three previous months’ similar rises). Going forward, inflation could drop by only a few tenths between now and the end of the summer, and then rise back as of October, when the new VAT rate hikes will come into force.
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