1 February, 2016
Main Macro Events This Week
United States: The economic calendar will be customary drumbeat to the January employment report, where nonfarm payrolls (Friday) are expected to increase by 200k (median 200k), with a 190k private payroll gain. The unemployment rate is expected to tick down to 4.9% (median 5.0%) from 5.0%, which could cause a stir if realized. The workweek is expected to remain at 34.5 from November, while hourly earnings are expected to be up 0.3% which would leave a 2.3% y/y rise and hours-worked should be up 0.1% for the month following a 0.3% decrease last month. On balance an as-expected report would leave the Fed’s jobs pillar in sturdy shape, but while “global economic and financial developments” continue to vex them, from a tactical standpoint risk is that disappointment on the the jobs front would feed market fears about slowing global growth. Also on tap this week is December personal income (Today), forecast to rise 0.3% (median 0.2%), while PCE is seen unchanged (median 0.1%) and core PCE prices up just 0.1%. Markit PMI manufacturing is also due, along with January ISM set to tick up to 48.5 (median 48.0) vs 48.2 and construction spending is expected to snap back 0.6% in December from -0.4% previously. There’s just lonely vehicle sales (Tuesday), projected to rise 1.6% to 17.5 mln units in January. MBA mortgage data returns (Wednesday), along with the ADP employment survey, seen rising 190k in January vs 257k in December. Markit PMI services is also on tap, along with ISM Non-Manufacturing set to hold static at 55.3 in January. Preliminary Q4 productivity may slump to 2.5% (median -1.8%) compared to +2.2% in Q3 (Thursday), driving unit labor costs up sharply to 5.7% from 1.8%. That leaves factory goods orders set to skid -3.0% in December (-2.7% median) vs -0.2%.
Canada: economic data is concentrated on the final day of the work week: Friday will see the release of January employment, December trade and the Ivey PMI for January. The employment report is expected to reveal a 10.0k gain in January employment after the 22.8k rise in December. The unemployment rate is seen at 7.1%, matching the rate in December. The trade balance is expected to narrow to -C$1.6 bln in December from -C$2.0 bln in November. Exports are seen rising 0.5% m/m in December after the 0.4% gain in November. Imports are expected to fall 0.3% m/m in December after the 0.7% drop in November. The Ivey PMI is projected to improve to a seasonally adjusted 51.0 in January from 49.9 in December. Results that match expectations across these reports, notably for employment and trade, would underpin the BoC’s decision to hold rates steady last month. There is nothing from the Bank of Canada this week, with BoC Deputy Governor Lane’s speech on February 8th the next appearance from a bank official.
Europe: The data calendar this week should not challenge the rate outlook substantially. Confidence indicators have been coming off, but still remain at relatively high levels and the final readings of Eurozone manufacturing and services PMIs for January are unlikely to hold real surprises, with the manufacturing reading (today) expected to be confirmed at 52.3 and the services reading (Wednesday) at 53.5, leaving the composite at 53.6 (medians same), down from recent levels, but still pointing to ongoing robust expansion. German manufacturing orders (Friday) meanwhile are expected to correct -0.7% m/m (median -0.5%) from the strong 1.5% m/m rise in December. Markit said companies are sitting on a large amount of unfulfilled orders, which should keep production and employment growth going even against global headwinds. The German sa jobless number (Tuesday) is seen falling 9K, leaving the sa jobless rate unchanged at a very low 6.3% (medians same). The labour market is improving not just in Germany and the overall Eurozone December unemployment rate (Tuesday) is expected to fall to 10.4% from 10.5%. The Eurozone data calendar also has retail sales and producer price inflation for December as well as Italian preliminary HICP rates for January. Supply comes from Spain, France and Germany, with the latter auctioning 5-year Bobls on Wednesday. Apart from Draghi’s presentation on Monday ECBspeak comes from Constancio and Knot among others and the ECB’s economic bulletin is due Thursday.
United Kingdom: The January manufacturing PMI survey (today) gets the ball rolling. We expect an ebb to a 51.6 reading (median 51.8) from December’s 51.9. This would fit the picture painted by the CBI’s industrial trends survey for the same month, reaffirming the weak-link status of the manufacturing sector in the UK economy. The construction PMI (Tuesday) is seen dipping to 57.5 (median same) from 57.8, and the services PMI (Wednesday) has us expecting a 55.4 outcome (median 55.2), slightly off the 55.5 reading of the previous month. This would leave the composite PMI at 55.0, down from 55.3. December lending data from the BoE has us anticipating a capping out in mortgage approvals to 69.6k, down from 70.4k in November. Unsecured consumer lending, and non-finance business lending will also interest.
China: China’s manufacturing sentiment remained contractionary in January, as expected. The official manufacturing PMI fell to 49.4 from 49.7 in December. The erosion leaves the lowest reading since the official survey fell below 50.0 in August of 2015. The privately complied Caixin/Markit manufacturing PMI improved to a still weak 48.4 from 48.2 in December. The Caixin/Markit survey has been below 50.0 since February of 2015, seeing a record low of 47.2 in September of last year. The Caixin/Market January services PMI (Wednesday) is penciled in at 50.1 from 50.2. India’s RBI meets on Tuesday, and is expected to keep rates steady at 6.75%. South Korea December trade surplus (today) is seen narrowing to KRW 6.0 bln from 7.2 bln in November, while January CPI (Tuesday) is expected to cool to 1.1% y/y from 1.3% previously.
Japan: can be expected to get a lift in sentiment following the BoJ’s shocker move on Friday, though any improvement will not be evident in this week’s light calendar. Final Markit manufacturing PMI (today) sank to 52.3, down from December’s 52.6 and the lowest in three months, but still, at least, indicating growth. Services PMI (Wednesday) will be also of interest. The January flash manufacturing index dipped to 52.4 from 52.6 in December, while the services index slid to 51.5 from 51.6. January consumer confidence (Wednesday) is expected to dip to 42.5 from 42.7, while on Friday, preliminary December leading and coincident indices are due. BoJ Governor Kuroda’s speech (Wednesday) will be closely followed after last week’s action.
Australia: Australia’s calendar is highlighted by the RBA meeting (Tuesday). The Bank left rates at 2.00% in the December 1st meeting, and we expect no change in the rate setting this week. The bank releases the Statement on Monetary Policy (Friday), which will include updated growth and inflation projections. As for economic data, the December trade deficit (Wednesday) is seen at -A$2.5 bln compared to the -A$2.9 bln shortfall in November. Building approvals (Wednesday) are expected to bounce 5.0% m/m in December after the 12.7% drop in November. Retail sales (Friday) are seen expanding 02.% m/m in December after the 0.4% gain in November.
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