In the Euro area, the November data should show inflation cooling to 2.7% yoy in Germany and to 2.9% yoy in Spain, but steady at 3.8% yoy in Italy and at 3.0% yoy in Euro area average terms. Inflation should moderate towards 2% from early 2012..…
The coming week is packed with data in the United States. The November data should confirm the gradual improvement in activity: the employment report should show an acceleration in the employment dynamic and a stable unemployment rate; auto sales should be up again, and the manufacturing ISM is expected to improve. October new home sales are expected to be up, while construction spending should also show a modest gain. The Beige Book should confirm moderately diffuse growth.
Monday 28 November
Euro area. Money supply is expected to be up 3.3% yoy in October vs. 3.1% yoy before. We expect M2 and M3 – M2 to accelerate further, while overnight deposits should be down again. The three-month moving average is estimated at 3.1% yoy vs. 2.6% yoy before.
Germany. The data from the Laender should be consistent with a 0.1% yoy contraction in consumer prices in November, on easing energy pressures and benign seasonality. Inflation is expected to be down two-tenths at 2.3% yoy on the national measure and at 2.7% yoy harmonised.
Germany. Retail sales are expected to be broadly steady in October (0.1% mom) following the +0.3% mom posted in September. The consumption dynamic surprised over the summer months by rising +0.8% qoq. We expect moderation between now and year-end 2011.
New home sales should rise to 320k in October from 313k in September. The NAHB survey showed an improvement, while new starts rose. September recorded a surge in sales (+5.7% mom), which limits the level expected in October. Even with a small increase in sales in October, the sector has been virtually steady in a narrow range for around one year.
Tuesday 29 November
Euro area. The EU Commission index of economic confidence is expected to be broadly steady at 94.7 in November, given the improved sentiment among households and in services, as shown by the national surveys. The index remains at historical lows and the improvement in services sentiment seen in November may be no more than a pause.
Spain. The preliminary estimates should show inflation cooling to 2.9% yoy from 3.0% yoy; the gradual easing of inflation pressures should pick up from January baring fiscal measures that include hikes in controlled prices and VAT.
Consumer confidence as measured by the Conference Board is expected to improve to 46 in November from 39.8 in October. Confidence should return close to the September levels (46.4), recouping the large fall posted in October. In November the expectation is for an improvement in both current conditions (which had fallen to 26.3, their lowest since November 2010) and expectations (which had fallen to 48.7, their lowest since March 2009).
The other confidence indices have picked up since the October plunge.
Wednesday 30 November
November inflation should be unchanged from October at 3.0% yoy; energy will make only a small contribution to the month-on-month dynamic, while pressures might also come from fresh food. The inflation dynamic will fall back below 2% by June as the adverse base effect lapses. The economic slowdown will help cool pressures on costs, pay and prices.
The unemployment rate is estimated at 10.2% in Euro area average terms, unchanged from October. The labour market will certainly be impacted by the economic slowdown; indeed, we expect the unemployment rate to rise to 10.6% by September 2012.
Germany. Unemployment is expected to be up slightly in November, by +7k. The unemployment rate will stick at 7.0%. German unemployment might rise over the next 12 months since the country will not be immune from the economic slowdown.
Italy. The month-on-month unemployment rate is estimated at 8.3% in October, unchanged from September. The stagnation of economic activity and the introduction of tight fiscal policy measures will exacerbate the labour market deterioration seen in September. Accordingly, we have revised up the projected unemployment rate for the coming years. However, we believe the jobless rate is unlikely to top the highs recorded during the recession (8.7% in April 2010).
France. Retail sales should make up some of the ground lost in September, expanding by 0.2% mom, thanks mainly to apparel and other manufactured goods.
Italy. Consumer prices should be unchanged in November, leaving the year-on-year dynamic steady at 3.8% yoy on the harmonised measure and at 3.4% yoy on the national measure. Some of the energy-induced pressures should have eased in November. Italian inflation is estimated at 2.6% yoy by June 2012.
The ADP estimate of new non-farm payrolls in the private sector is expected to improve to +130k in November from +110k in October.
Productivity growth in the third quarter should be revised down to 2.5% qoq from the advance estimate of +3.1% qoq. The unit labour cost is expected to fall -2.1% qoq.
The Chicago PMI should improve to 59 in November from 58.4 in October. The breakdown showed some signs of weakness (orders at 61.3 vs. 65.3), but the indications from the auto sector and the signs from the manufacturing sector in general remain positive.
The Beige Book ahead of the December FOMC meeting should report some tentative signs of improvement in activity and in the diffusion of growth. The report should not alter the FOMC’s view of a still fragile recovery exposed to significant downside risks.
Thursday 1 December
France. The 3Q11 unemployment rate should be steady at 9.6%. Unemployment might rise to 10% in France during 2012 on the back of the slowdown.
The final PMI estimates for November should confirm a fall in the manufacturing index to 46.4 from 47.1 in October. The crisis will likely further depress the sentiment indices and real activity around year-end.
Construction spending should be up 0.2% mom in October. New starts increased but activity remains sluggish, with property prices still falling.
The manufacturing ISM is expected to rise slightly to 51.5 in November, from 50.8 in October. The regional surveys are consistent with a moderate improvement in the national index. The data would confirm expectations of 4Q11 growth around 2.5%.
Auto sales are expected to expand further to 13.5M units ann. in November, based on the positive indications from dealerships in the first half of the month. The uptrend in auto sales will lend support to consumption in the fourth quarter.
Friday 2 December
Non-farm payrolls are expected to be up 125k in November, slightly above the average for the last four months (117k). The movement in October was 80k and might be revised up. New jobless claims have trended down slightly in recent weeks. The employment dynamic might improve a little if temporary hires for the Christmas season increase. The sector surveys signalled improved job market conditions in November. New non-farm payrolls in the private sector should be up 145k. The unemployment rate is estimated at 9%, as in October. Hourly wages are expected to be up 0.2% mom, in line with trend.
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