In the euro area, the EU Commission’s economic sentiment index is expected to come in lower by 1.1 in a March, while staying at stronger levels than the PMI. The preliminary estimate should point to a drop in inflation in March, to 1.6% from 1.9% in Italy, and to 2.6% from 2.8% in Spain. Retail sales are expected to slow by 0.6%m/m in Germany, after surging in January. In France, consumer spending is forecast to reduce……………
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Busy calendar of data releases in the United States. The Chicago PMI should stay on high values in March, and consumer confidence is expected to feel the effects of the enforcement of the automatic spending cuts. February data should prove to be positive, with durable goods orders, personal spending, and personal income all on the rise; new home sales are estimated to have dropped following their sharp rebound in January, while keeping up a positive trend. The final 4Q 2012 GDP growth estimate should be revised upwards again.
Monday 25 March
Euro area
Italy. Consumer confidence may turn back down in March, to 85.5 after rebounding to 86 in February. The index would in any case stay above the long-term low of 84.7 hit last January.
Uncertainty over the political picture is dampening sentiment, in a picture probably already marred by increasing employment concerns; the only respite for households will come from the ongoing decline in the inflation trend.
Tuesday 26 March
Euro area
France. The consumer confidence index is expected to drop to 85 in March, from 86 in
February. Propensity to spend has decreased in the opening months of the year, hitting a low at values last seen early in 2009. The savings capacity index also remains depressed. The first effects of the stimulus package put in place to spur competitiveness and the labour market by the French government in January, with the CICE programme, should become visible in 2Q 2013 at the earliest, and are likely to express themselves fully in 2014.
United States
Orders of durable goods are expected to rise by 3.8% m/m in February, from -4.9% m/m in January, in the wake of a sharp rebound in the civil aviation segment. Net of the transport item, orders should be up by 0.6% m/m (from +2.3% m/m in January). The orders component of the ISM has risen solidly since the beginning of 2013, signalling that the orders trend should accelerate compared to the end of 2012.
The Conference Board Consumer confidence index is estimated to drop to 67 in March from 69.6 in February. The indications provided by the University of Michigan survey are negative for March, due to worsening sentiment tied to the enforcement of the automatic cuts contained in the Budget Control Act, and uncertainty on the fiscal policy front. The Conference Board’s measure should also show a decline in March, while staying well above its January level (58.4), driven down by the tax hikes at the start of the year.
New home sales in February should be down to 420k from 437k in January. The January change was excessively strong, and the sales figure hit a peak since July 2008. Even a 3.8% correction would keep new home sales on a solid uptrend.
Wednesday 27 March
Euro area
The EU Commission’s economic sentiment index is expected to drop to 90 from 91.1 in February, marking a hiatus in the recovery in confidence observed since the end of 2012. The composite PMI index for the euro area signalled a slowdown in activity in March in Germany as well, both in manufacturing and in the services sector. Households’ confidence should be confirmed stable, and sentiment in the retail sales segment should stay depressed but broadly unchanged compared to the February survey. The EU Commission’s index would therefore stay on higher average levels than in 2H 2012, and continues to point to a recovery in productive activity, albeit not sufficient to propel the euro area out of the recession.
Spain. The preliminary inflation estimate should reveal a drop to 2.6% y/y in March, from 2.8% y/y the previous month, as a result of moderating energy prices. In the months ahead, Spanish inflation is expected to moderate further, and to bottom out at 1.6% y/y in the summer. Risks to the forecast are skewed to the downside, given the significant slack in the economy, and in particular plunging consumer spending.
Thursday 28 March
Euro area
The trend of the M3 aggregate is expected to prove broadly stable in March, at 3.5%y/y. The M2 aggregate should continue to grow at a strong pace (with deposits with maturities longer than three months at the fore, which recovered in 4Q 2012), while the M3–M2 aggregate will remain in negative territory, as a marked preference for liquidity continues to prevail. Among the counterparts of M3, we expect a slight recovery in lending to the private sector, to -0.8% from a previous rate of -1.1%y/y).
Germany. Unemployment is forecast to increase by six thousand units in March, due to the lagged effect of the weakness of the economy recorded at the end of 2012. The unemployment rate is expected to stay put at 6.9%. We cannot rule out increases in the months ahead, up to 7.1-7.2% in the summer.
Retail sales are forecast to correct, reabsorbing in part their January surge (+3.0% m/m). We expect a 0.6% m/m decline, which if confirmed would in any case leave sales on course for a +1.7% q/q increase a March. Vehicle registrations decreased by 3.0% m/m in February (based on our estimates). On the whole, consumer spending could accelerate to +0.3% q/q in 1Q 2013 from +0.2% q/q in 2H 2012.
Italy. Business confidence could retrace for the second month in row in March, to 77 from 77.4 in February. The index would in any case stay above the recent low of 75.9, reached in December. The uncertain political picture adds to the dampening of confidence caused by persistently weak domestic demand.
United States
The final estimate of 4Q 2012 GDP growth should be revised to +0.6% q/q ann. from 0.1% q/q ann., in the wake of very strong data on investments in company structures, and a less negative contribution from inventories.
The Chicago PMI should stabilise in March at close to its February level, rising to 57 from 56.8. The survey was univocally positive in February, with orders and output at 60.2, and employment down to 55.7 to 58. Growth in the manufacturing sector should continue, based on the positive indications provided by monthly surveys and data.
Friday 29 March
Euro area
France. Consumer spending is estimated to have increased by 0.4 m/m in February, after the – 0.8% m/m contraction observed in January. Vehicle registrations are recovering from the previous month’s decline. If confirmed, the reading would place the quarterly trend on course for a -0.6% q/q decline from -0.1% q/q in December, suggesting a slowdown in households’ spending in the opening months of the year.
Italy. Consumer prices are forecast up by one-tenth in March, on a par with February. In harmonised EU terms, prices would rebound by 2.1% m/m, given the effect of the comparison with January-February end-of-season sales prices. The energy component should have contributed to easing pressures on prices. Inflation would slow by four-tenths as a result, both in terms of the national measure (from 1.9% to 1.5%) and of the harmonised rate (from 2% to 1.6%).
United States
Personal spending is estimated to have increased in a February by 0.7% m/m, driven by gasoline price increases and by a moderate perk-up in real consumption. As the deflator is forecast to rise by 0.5% m/m, real spending should edge up by a moderate 0.2% m/m. Personal income should rebound, showing a +1% m/m change after sliding by -3.6% m/m in January, on the back of the payroll tax hike. Employment Report data highlight a sustained change in earned income. The savings rate should recover a part of the January drop, rising back to 2.7% from 2.4%.
Consumer confidence as surveyed by the University of Michigan in March (final) should brighten back to 75, from a preliminary reading of 71.8, recovering part of the ground lost compared to February, when the index had risen to 77.6. The weekly Bloomberg Comfort Index has stayed on a positive in recent weeks, signalling that the dip in confidence seen in early March, tied to the enforcement of the automatic cuts, may be short lived. The negative change was especially strong for the expectations index.
Appendix
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