ƒ Eurozone Q3 GDP numbers to show weakening
annual trend
ƒ Japan set to see rebound from Q2 weakness
ƒ UK inflation Report to highlight growth worries
Economic data releases look set to merely provide side
shows in a week likely to be dominated by the euro area
financial crisis. However, the Bank of England’s Inflation
Report will give important insight into how the crisis has
affected the growth and inflation outlook. The report will no
doubt show a more pessimistic growth outlook, and will be
scrutinised for clues as to whether more QE will be
announced in December.
GDP releases for Germany, France and the Eurozone will be
closely watched to assess the impact of the crisis on the real
economy in Q3. Growth rates may have rebounded in France
(from zero in Q2 to 0.3%) and in Germany (from 0.1% in Q2
to 0.5%). However, these improvements in part reflect a
rebound from disruptions to supply chains resulting from
Japan’s earthquake, and mask an underlying trend of weaker
growth, which has been highlighted by PMIs and will be
reflected in lower annual growth rates. For the Eurozone as a
whole, GDP may have risen by 0.2% in Q3, but PMIs signal
a strong risk of the bloc returning to contraction in Q4.
Eurozone industrial production data for September are also
expected to show a monthly decline.
Third quarter GDP data for Japan should meanwhile show a
strong revival from the quake-related 0.5% contraction seen
in Q2. The consensus is for a 1.5% expansion.
Inflation numbers are also updated for the US, UK and
Eurozone. Rates look set to fall as commodity price rises
drop out of annual comparisons, but some stickiness may
still be evident in the latest data.
The UK retail sales numbers are likely to have been flat in
the three months to September, but the labour market will
have weakened, according to surveys, pushing up
unemployment. Wage pressures likely moderated further.
Other key indicators include US industrial production and the
Philadelphia Fed survey. Both are likely to have shown a
modest improvement in growth rates, though retail sales data
are expected to have grown only 0.2% in October compared
to 1.1% in September.
Monday
Economic growth statistics for Japan, as measured by gross
domestic product, are published just before midnight, with
GDP forecast to have risen at a quarterly rate of 1.5% in Q3.
Final industrial production data for September are also
published after the initial estimate showed a slump in factory
output.
Following data released this week that showed industrial
production falling at stronger-than-expected rates in France,
Germany and Italy, factory output across the single
currency area as a whole almost certainly fell on a month-onmonth basis during September. Elsewhere in Euroland,
French current account data are published.
With inflation in India remaining stubbornly high, despite a
sustained period of interest rate hikes, the wholesale price
index will be watched with great interest
Tuesday
A jam-packed day of economic data releases starts with Q3
economic growth statistics for the core Eurozone nations of
Germany and France. Analysts expect both economies to
have grown over the third quarter, albeit at historically
subdued rates. PMI data have already signalled continued
weakness at the start of the fourth quarter
A few hours later, flash GDP and international trade
numbers are published for the single currency area as a
whole. Economic growth is expected to remain unchanged at
a quarterly rate of 0.2%, but the downward trajectory of PMI
data in recent months suggests that risks to growth are
primarily to the downside.
The Eurozone also sees the release of Italian trade statistics
and ZEW survey data, which last month showed German
analyst and investor sentiment falling to its lowest level in
nearly three years.
Economic commentators in the UK will have a keen eye on
the latest snapshot of consumer price pressures after
inflation surged from an annual rate of 4.5% to 5.2% in
September. The monthly index of retail prices is also
released.
Meanwhile, a host of key economic data are published in the
United States, namely retail sales, producer prices,
business inventories, Empire State manufacturing
survey and weekly Redbook and ICSC store chain sales.
The headline index monitoring the performance of
manufacturers in New York State is expected to climb higher,
while retail sales are forecast to rise at a slower rate than in
September.
The Central Bank of Chile also meets to discuss monetary
policy against a backdrop of weakening global growth.
Wednesday
The Bank of Japan (BoJ) convenes its monthly policy
meeting. With the yen remaining strong and economic
recovery in doubt, further monetary stimulus will likely be
discussed among policy members.
Both Italy and the Eurozone as a whole see the release of
final consumer price inflation numbers for October.
The UK labour report is published mid-morning. Data for the
three months to August revealed that the number of
unemployed reached 2.57 million, its highest level
since October 1994, pushing the unemployment rate up to
8.1%. The KPMG/REC Report on Jobs signals that labour
market weakness has continued into the final quarter of the
year.
Across the Atlantic, consumer price inflation, real
earnings, capacity utilisation, industrial production,
Treasury international capital, NAHB housing market
index and weekly MBA mortgage applications data are
published. Factory output is expected to have risen 0.3% on
a monthly basis, according to a poll conducted by Reuters.
Thursday
Official UK retail sales numbers will provide a snapshot of
consumer spending patterns. Cash-strapped consumers are
feeling the pinch in the face of high inflation, job insecurity
and the fragile economic recovery. In fact, the Visa UK
Expenditure report released this week showed household
spending remaining subdued heading into a crucial
Christmas spending period for high street retailers.
Friday
US leading indicators, Italian industrial orders and
German producer prices data are all published on Friday.
Markit's commentary notes and press releases can be
accessed online, as can a diary of forthcoming Markit release
dates.
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