agenda 4

Makroökonomische Daten – 31-04 November 2011 (Englisch)

Makroökonomische Daten – 31-04 November 2011 (Englisch) .   


          In the Euro area the markets will focus on the ECB meeting (the first to be chaired by Mario Draghi) and the G20 summit in Cannes (which should flesh out the EU crisis-busting plan, notably with regard to possible IMF and non-EU G20 involvement). The economic data due out should show: 1) inflation little changed in October (it should fall in the coming months); 2) unemployment steady, at lows in Germany and still double-digit in the Euro area; 3) confirmation of recession level of PMIs. The factory orders data in Germany might provide early indications of the trend in the real data as of September, which will be crucial in gauging the extent of the Euro area slowdown, aside from the summer volatility and financial tensions.
          The coming week is packed with data and events in the United States. The FOMC meeting, followed by Bernanke’s press conference, should introduce changes to the communication, revise down the growth forecasts and hint at a possible third quantitative easing programme.
          The October data should be moderately positive. The employment dynamic is expected to be in line with the recent trend, although there are upside risks to the unemployment rate. The ISM surveys should show a slight improvement, while auto sales should confirm the high levels seen in September.
          Monday 31 October
          Euro area

            On the preliminary estimate, Euro area inflation might stick at 3% yoy in October. Based on the data already out, the CPI fell one-tenth in Germany (to 2.8%) and was steady in Spain (at 3%). The figure would be consistent with prices growth of three-tenths during the month.
          The current level might mark a high for inflation, the trend in which, especially ex the more volatile components and the impact of indirect taxes and controlled prices, is not worrying. In any case, the CPI is not expected to return close to the ECB target before the spring.
            The Euro area unemployment rate might be steady at 10% for the fifth month running in September. Given the fraught economic situation in several countries, the jobless rate might rise looking forward, after the signs of improvement seen this last year.
            Italy. Consumer prices on the national measure are expected to be up three-tenths in October (they were steady in September). On the harmonised measure the forecast is more uncertain since this index is liable to broad monthly movements due to the new classification of seasonal products; we estimate +0.8% mom. Inflation should rise one-tenth to 3.1% yoy on the national measure and to 3.7% yoy harmonised. October might mark the maximum impact of the VAT hike (in force since 17 September).
            Italy. The unemployment rate could be steady at 7.9% in September. The jobless rate has been on a clear downtrend in the last 18 months, from the 8.7% high recorded in April 2010.
          However, the coming months are unlikely to bring a further improvement since the economic stagnation will put a halt to the labour market recovery.
          United States
            The Chicago PMI is expected to be broadly steady at 60 in October, vs. 60.4 in September.
          The Beige Book was moderately positive in respect of activity in the Chicago district and the positive signals from the auto sector should help keep manufacturing confidence high in October.

          Tuesday 1 November
          United States

            Construction spending is expected to be up 0.3% mom in September, following the substantial gain recorded in August (+1.4% mom). New starts were up 15% mom at 658k in September, vs. 572k in August, their highest level since April 2010; nonetheless, completed units show a far smaller increase.
            The manufacturing ISM should be little changed in October, rising to 52 from 51.6 in September. The September survey breakdown was relatively positive and the regional surveys already out, namely Philly Fed and Empire, show improvements. The Richmond Fed index remained in negative territory, at -6 as in September, and confirms the Beige Book indications:
          the recovery is very moderate and uneven across the various regions.
            Auto sales should show a small gain to 13.2M units ann. in October after the vigorous September bounce to 13.1M units ann. The preliminary indications based on dealership data compiled by JD Power in the first two weeks of the month are positive.

          Wednesday 2 November
          Euro area

            The final reading of the manufacturing PMI for October might confirm the flash estimate of 47.3 (third straight month below 50), vs. 48.5 in September. The first estimate for Italy might show the PMI slipping to 48 from 48.3. In general, the level of the manufacturing PMI (notably the balance between new orders and inventories) is now consistent with, at best, economic stagnation in industry.
            Germany. The unemployment rate might remain steady at 6.9% in October, its lowest since 1991. The jobless rate should fall further by around 15k. In the coming months, we expect broad labour market stabilisation. The incipient cycle slowdown is not yet sufficient drive up unemployment in the largest economy of the Euro area.
          United States
            The ADP estimate of new non-farm payrolls in the private sector October is expected by the market to stand at +100k units, vs. +91k in September.
            The FOMC meeting, followed by Bernanke’s press conference, should end with a downward revision to growth and an upward revision to the unemployment rate. The committee should make changes to the communication strategy, according greater weight to the maximum employment goal, interpreted in light of the long-term macroeconomic projections. This change might be accompanied by an explicit policy reaction function, according to which the Fed might signal its intention not to touch rates until the unemployment rate nears an equilibrium range; it is also possible the Fed will make the case for a fresh quantitative easing drive to fulfil its mandate in respect of full employment.

          Thursday 3 November
          Euro area

            ECB meeting. We do not expect a sudden change of course with the installation of Draghi: the ECB will have to continue defending Euro area stability via the government bond purchase programme, justifying it on the principle of full separation and the need to ensure monetary policy transmission. The risks of a recession early in 2012 are increasing: the ECB will signal likely revisions to the macroeconomic outlook and might trail a first refi rate cut in December.
          The minimum level of 1% will be reached by March 2012. The meeting should furnish details on the new covered bond purchase programme.
          G20 summit in Cannes, at which European leaders will arrive boosted by the debt crisis response plan. The meeting is important since in the spin-off of the EFSF, which will be funded using both public and private capital, the IMF and emerging countries might also play a part.
          United States
            The non-manufacturing ISM is expected to rise to 54 in October from 53 in September. The Richmond Fed service sector survey has deteriorated for firms in sectors other than distribution, but the Beige Book indications were slightly positive and point to a small overall improvement.
          Friday 4 November
          Euro area

            The final reading of the composite PMI for October might broadly confirm the flash estimate of 47.2, coming in at 47.3 (second month below 50), vs. 49.1 in September. The easing of the financial tensions in the banking sector might produce a small revision to the service index, to 47.5 from the flash estimate of 47.2, still heavily down on 48.8 in September.
            Producer prices should be up three-tenths in September, giving year-on-year PPI slowing from 5.9% to 5.8%. The easing of upstream pressures in the production chain should continue through the coming months.
            Germany. Factory orders might fall three-tenths in September after the contractions recorded in July and August. Year-on-year, orders would still accelerate to 7.1% from 3.6%. For several months now the surveys have been flagging a slowdown in orders, notably from abroad, in Germany too.
          United States
            The October employment report should confirm positive employment growth, albeit insufficient to bring down the unemployment rate. New non-farm payrolls should total 125k, in light of the indications on new jobless claims, roughly stable around 400k in recent months, if stripped of the exceptional effects of the Verizon strike and the temporary freeze on public sector employees in Wisconsin. Job creation in the private sector should amount to 120k, roughly in line with the average for the last three months (+117k). The public sector should show a small, temporary increase in payrolls due to seasonal adjustment issues; this is by no means a reversal of the negative trend under way since the start of the recession. The unemployment rate should remain steady at 9.1%, with upside risks: payrolls as measured by the household survey have grown by 364k avg. in the last two months, well in excess of both the three-month average (230k) and the six-month average (+26k): a slowdown in this aggregate on the same participation rate might push the unemployment rate up to 9.2%.
          Hourly wages are expected to be up 0.2% mom, as in September.


          Appendix
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