Main Macro Events This Week
- United States: There are a number of important indicators due, including housing figures, PMIs, durables, and trade. But the Advance Q4 GDP print (Friday) may be the most interesting amid global worries over a worldwide slowing in growth. We are forecasting slippage to a 1.3% pace (median 0.8%), from Q2’s 2.0%, with erosion in consumption, fixed investment, and an inventory drawdown weighing. The November Case-Shiller and the FHFA home price indexes are slated for Tuesday, along with January consumer confidence and the Markit services PMI. New home sales for December (Wednesday) are forecast rising to 0.500 mln. The usually volatile durable goods report (Thursday) is expected to rise 0.5% following the unchanged November print. Also on Thursday are weekly initial jobless claims and December pending home sales. Along with GDP on Friday, there’s the report on Advance trade in goods, Q4 ECI, the January Chicago PMI, and consumer sentiment.
- Canada: In Canada, the economic calendar moves to the slow lane this week after last week’s thrill ride of dueling projections for the Bank of Canada’s (BoC) announcement and the full slate of November growth data and the December CPI. We receive the final word on November’s total growth performance, with November GDP (Friday) seen expanding 0.3% after the flat reading in October. The industrial product price index (Friday) should reveal a 0.5% drop (m/m, nsa) in December after the 0.2% drop in November, as weaker energy and commodity prices weigh. Further deprecation in the Canadian dollar versus the U.S. dollar could provide a boost to the IPPI however, and is the main upside risk to our projection. Meanwhile, the IPPI is expected to post a 0.9% y/y rate of increase in December after the 0.2% drop in November. A difficult comparison with a sharply lower December of 2014 index level is to blame. The report will not challenge the BoC’s view that the underlying inflation backdrop remains tame as the economy operates below potential output. The January CFIB Business Barometer small and medium business outlook survey is due (Thursday), which will provide an early look at conditions in the new year. The Bank of Canada takes a breather from events this week. Nothing is on the docket until February 8, when Deputy Governor Lane delivers a speech in Montreal.
- Europe: Data releases this week will bring more economic sentiment data as well as preliminary January inflation numbers. The latter should show an uptick in headline rates, but even if the overall Eurozone HICP number will rise to 0.4% y/y (med same) as expected, it would still remain at very low levels and far below the ECB’s definition of price stability. The overall EMU CPI number on Friday will be preceded by preliminary German HICP on Thursday, seen also rising to 0.4% y/y from 0.2% y/y and preliminary French readings (Friday), expected to show a rise in the headline rate to 0.5% y/y from 0.3% y/y. We were looking for a dip in the German Ifo Business Climate reading (today) to 108.5 from 108.7 but the actual figure was even weaker and came in at 107.3. We also expect to see a decline in the ESI Economic Sentiment (Thursday) to 106.6 (med 106.5) from 106.8. Inflation projections may be revised down, but interestingly, so far growth projections have been left largely untouched, highlighting that it is the falling oil prices that is having the largest impact on price developments once again. Finally German GfK consumer confidence is seen falling to 9.3 from 9.4. With the focus firmly on future world growth GDP readings for Q4 2015 should not change the ECB’s stance significantly, but preliminary French and Spanish data on Friday will still attract some attention and we are looking for growth rates of 0.2% q/q and 0.8% q/q respectively. Data releases also include Eurozone M3 numbers on Friday, French consumption, Italian orders and business confidence, German retail sales and import price inflation.
- United Kingdom: The calendar this week features the January CBI surveys, for industrial trends (today) and distributive sales (Friday), the first estimate of Q4 GDP (Thursday), and the January Gfk consumer sentiment survey (Friday). The data are collectively likely to fit the later-rather-then-sooner view with regard to the BoE’s course to rate lift-off after a near seven-year hiatus. We expect the CBI’s industrial trends survey to dip to -10 (median same) in the headline total orders balance, down from -7 previously. The CBI’s sales survey has us anticipating an +18 outcome in the headline realized sales balance, slightly off the +19 outcome seen in the prior month. We expect Q4 GDP to lift to 0.5% q/q (median same) from 0.4% in Q3, and Gfk sentiment to dip to 1 from 2.
- China: China’s calendar is virtually empty, with just leading indicators that are due on Thursday.
- Australia: Australia’s calendar is highlighted by CPI (Wednesday), expected to slow to a 0.2% pace in Q4 (q/q, sa) from the 0.5% rate of expansion in Q3. CPI is seen running at a 1.5% y/y pace in Q4, matching the growth rate in Q3. Core inflation measures are seen as slowing slightly: The trimmed mean is expected to slow to a 2.0% pace in Q4 from 2.1% in Q3 while the weighted median is projected at a 2.1% y/y pace in Q4 from 2.2% in Q3. Trade prices are also due (Thursday), with import prices expected to fall 1.0% in Q4 (q/q, sa) after the 1.4% gain in Q3. Export prices are projected to tumble 3.0% in Q4 after the flat reading in Q3. The RBA is on the final week of its customary intermission from appearances or events during January, with the February 2 meeting the next event on their calendar. The RBA left rates at 2.00% in the December 1st meeting, and our base case is for steady policy to begin the new year. The modest slowing projected in total and core CPI measures for Q4 would be supportive of no change in policy at the February meeting.
- Japan: The BoJ meeting highlights Japan’s busy calendar. While we expect the Bank will remain in “wait and see mode” until March at the earliest, the slowing in its giant neighbor and the disinflationary effects of weaker oil prices and a stronger yen, could accelerate further easing moves. And this week’s data will be important for policymaker deliberations. The calendar kicks off with the December trade report, that showed country’s exports fell by 8% in December. November revised leading and coincident indices were also published today, both declining slightly from the previous number. December services PPI (Tuesday) is seen slipping to a 0.1% y/y rate from 0.2% in November. December total retail sales (Thursday) are forecast to have rebounded 0.1% y/y from a revised 1.1% drop in November, while large retailer sales are seen up 0.1% y/y from the prior revised dive of 1.6%. The remainder of the calendar is due Friday. December national CPI is expected to slow slightly to 0.2% y/y from 0.3% on an overall basis, and remain steady at 0.1% y/y on a core basis. January Tokyo CPI is seen unchanged y/y overall, matching the December outcome, and up 0.1% y/y on a core basis, also unchanged from the previous month. December unemployment should remain flat at 3.3%, while the job offers/seekers ratio is also seen steady at 1.25. December personal income is due, as is December PCE, with the latter expected to improve slightly to -2.6% y/y from November’s -2.9% reading. Preliminary December industrial production is penciled in at -0.5% y/y from -0.9%, while December housing starts are seen easing to 0.7% y/y from 1.7%. December construction orders are also on the docket.
Janne Muta
Chief Market Analyst
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