Busy calendar of data releases this week in the euro area. The initial 4Q 2012 GDP reading (in Spain) should confirm the Bank of Spain’s forecast of a 0.6% q/q contraction in growth. …….
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Monday 28 January
Euro area
The M3 monetary aggregate is estimated to have contracted in December by a further tenth, to 3.7% y/y, placing the three-month moving average at 3.8%, from 3.4% previously. The October rebound, prompted by a sharp reduction in tradable instruments, largely balanced by inflows on overnight deposits in a context of flattening a yield curve, is gradually waning. Loans to enterprises could continue to slow at a sharp pace (-1.8% between October and November).
Italy. Consumer confidence could recover somewhat in January, to 86, still in line with the long-term lows recorded in the past six months. Pessimism could ease a little in particular in the component of expectations for the economy in general; not so in for views on the current conditions of households. In any case, for the time being confidence levels are failing to promise a recovery in consumption.
United States
Orders of durable goods are expected to be up in December by 1.2% m/m, from +0.8% m/m in November. Net of the transport component, orders are estimated to have grown by 0.4% m/m, from +1.6% m/m the previous month. The orders component of the December ISM came in at just above 50 points, signalling a sharp slowdown for the aggregate after three consecutive strong monthly increases. Orders of capital goods are expected to rise after correcting in November.
Tuesday 29 January
United States
Consumer confidence in January, as surveyed by the Conference Board, should mark a further decline, to 64.5 from 65.1 in December. In December, confidence underwent a sharp decline (-6.4 points), mostly due to the expectations component (-14.4 points). The other confidence indices dropped again in January, as a result of expectations for tax increases following the deal struck to avoid the fiscal cliff. The January Conference Board index is expected to show a slight improvement in the expectations component, as opposed to deteriorating views on current conditions.
Wednesday 30 January
Euro area
ECB The Bank Lending survey for 2012 Q4 is unlikely to show a net improvement in credit conditions for households and corporates despite the renewed relative “quietness” in financial markets since august”. That said it is possible the survey will point to easier access to whole sale funding also for peripheral banks.
Spain. The preliminary estimate of 4Q 2012 GDP will lay bare a worsening of the recession. In line with the estimates published by the Bank of Spain, we expect a 0.6% q/q decline (twice the drop recorded over the summer months). In the year, GDP growth will contract by one tenth to -1.7%. Contrary to the euro area average, the recession could deepen further in Spain in the opening months of 2013.
The EU Commission’s economic sentiment indicator is forecast to improve in January to 88.5 from 87 in December. This would mark the third consecutive rise from the 84.3 low hit in October. The preliminary estimate of consumer confidence shows a rise to -23.9 from -26.3, and business confidence could improve to -13 from -14.4. We expect confidence in the services, construction and retail sectors to improve at a slower pace.
Italy. Business confidence in the manufacturing sector is expected to continue along the very slow recovery path observed in recent months, reaching 89.5 based on our estimates, from 88.9 in December. Confidence remains well below the long-term average (100.2). The surveys indicate that while the recession continues in the manufacturing sector, the cycle trough seems to have been overcome, mostly on the back of signals of a reacceleration in foreign demand.
United States
The ADP estimate of private sector non-farm payrolls is expected by consensus to come in at 163k, marking a correction compared to the very strong December figure (215k), left unconfirmed by the employment growth figure contained in the Employment Report.
The advance estimate of 4Q 2012 GDP should point to a sharp slowdown in growth, to 0.8% q/q ann. from 3.1% q/q ann. in 3Q 2012. The trend is expected to be impacted very negatively by inventories and foreign trade, which should represent a serious drag on growth, offsetting the strong contributions made by these same items in 3Q. End domestic demand components, however, should prove more supportive, with consumption expected on the rise and a return into positive territory of non-residential fixed investments. Residential investments should accelerate further.
The FOMC meeting should be interlocutory, with unchanged macroeconomic and interest rate projections compared to the Fall. The statement should not alter the message of a cautiously optimistic Fed, at the window in terms of monetary stimulus measures.
Thursday 31 January
Euro area
France. December retail sales are estimated to be up by 0.4% m/m (from 0.2% m/m in November). The year-on-year rate could climb back into positive territory, at +0.5% from – 0.2%. The reading would in any case be compatible with a stagnation in consumption in the autumn quarter.
Germany. Retail sales are estimated to have contracted by 0.1% m/m in December, after rising in November (+0.9% m/m, revised downwards from a previous rate of +1.2% m/m). The reading would be compatible with a 0.2% q/q drop in the consumption of goods at the end of 2012.
Germany. The unemployment figure could increase by eight thousand units in January, leaving the unemployment rate stable at 6.9%, in line with the closing three months of 2012. Going forward, the economic slowdown, which also affected Germany at the end of 2012, could result in further rise in the number of unemployed persons.
Germany. Laender data should be compatible with a sharp drop in consumer prices in January, by 0.4% m/m. Inflation should come at 2% both at the national level and in harmonised terns. Inflation in Germany may slow by a further few tenths in the months ahead, bottoming out at the beginning of the string.
The preliminary estimate should show inflation unchanged at 2.2% y/y in January, thanks to seasonal effects and to a favourable statistical comparison. The rise in energy prices in some countries might have reduced the monthly decline in prices. Inflation may fall below 2% by March.
United States
Personal spending in December should show a 0.2% m/m rise. In real terms, growth should also be positive by 0.2% m/m, based on expectations for a flat consumption deflator. Personal income is expected to accelerate, up by 0.7% m/m on the back of a strong increase in work hours and hourly wages, as well as of a possible reprogramming of payments to December, to avoid the January tax hikes. In December, the savings rate is expected to increase, confirming the uptrend recorded since October. From 3.6% in November, it should return to 4.1% in December, a level last seen in June. As regards deflators, the forecast of no change for the headline and core indices should result in a year-on-year change of 1.4% y/y for both price measures.
The Chicago PMI should be down in January to 51 from 51.6 in December. Despite the excellent health of the auto component, dominant in the Chicago area, indications from the other regional surveys were unmistakably negative, and point to a modest correction also for the Chicago PMI.
Friday 1 February
Euro area
The second estimate of manufacturing PMI should confirm the strong increase recorded in January, to 47.5 from a previous reading of 46.1. The divergence between the German index, on the rise, and the declining French PMI should also be confirmed. The initial estimate of the Italian PMI should also show an improvement, to 47.3 in our estimation from 46.7 in December.
The unemployment rate is estimated to have risen further, to 11.9% in December. The jobless rate is estimated to prove stable in Germany, as opposed to likely increases in the other major countries. Given the lag between the economic cycle and its effects on the labour market, the unemployment rate may peak in the autumn.
Italy. After the November hiatus, the unemployment rate may have resumed its uptrend in the closing month of the year, reaching 11.2% from 11.1% in November. Focus will be on the trend of unemployment among young adults, which soared to a historical high of 37.1% the previous month.
United States
The January Employment Report should outline a moderate improvement in the employment trend, with non-farm payrolls increasing by +175k after +155k in December. The improvement in the jobless claims trend, and favourable weather conditions, should support employment growth, in the construction sector as well. Also, the positive turn in the finances of most states should fuel a positive employment trend in the public sector, after years on the decline. The unemployment rate should come in stable at 7.8% for the second month in a row. As is always the case in January, in 2013 as well participation and employment data
could show some volatility in the month, due to the adjustments made at every turn of the year to data on the US population. Hourly wages should slow to +0.1% m/m, after growing for two months at a rate of +0.3% m/m.
Construction spending in December is expected to rebound sharply, by +0.9% m/m from – 0.3% in November due to the effects of hurricane Sandy. The Employment Report had pointed to an increase in the number of people employed in the sector in December, and housing starts had increased. The segment experiencing the strongest recovery should prove to be residential construction.
The January manufacturing sector ISM is estimated to be down to 49.5 from 50.7 in December, based on the negative findings of the latest regional surveys of the sector.
Auto sales in December should come in stable at the very high levels recorded in November, of 15.3 million ann. The figures should confirm the sustained auto sales trend.
Appendix
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