The Economic Week Ahead

November 23, 2015

Main Macro Events This Week

United States: The US Thanksgiving holiday on Thursday will see activity condensed into the first three days of the week. While the data calendar is highlighted with several important releases, including revised GDP, personal income, consumption, durable orders, housing stats, and consumer confidence, none are crucial enough to materially alter expectations for a Fed rate liftoff. October existing home sales (today) are expected to fall 1.8% to a 5.45 mln unit rate, unwinding some of the 4.7% rebound to 5.550 mln in September following the 5.0% drop to 5.300 mln in August. Q3 GDP (Tuesday) is expected to be revised higher to a 2.1% clip in the second release, from the disappointing 1.5% pace seen in the Advance report. However that is still considerably slower than Q2′s 3.9% rate. Global growth remains a major uncertainty, and especially in Asia. Consumer confidence for November (Tuesday) is seen rising to 98.5 after falling 5 points to 97.6 in October. Personal income and consumption figures for October (Wednesday) should help fine tune Q4 GDP forecast too. We’re forecasting gains of 0.4% for each and the strength from the employment report suggests upside risks. New home sales (Wednesday) are forecast bouncing 2.6% to a 480k pace in October after diving 11.5% in September to 468k. The housing sector remains choppy and generally disappointing. October durable goods orders (Wednesday) should edge up 0.5%, hardly correcting from the cumulative 4.2% decline from August and September, though weakness was mostly led by transportation.

Canada: Canada’s economic calendar is somewhat thin this week (Friday), with the industrial product price index (IPPI) the only top tier report. We expect October IPPI to fall 0.5% (m/m, nsa) after the 0.3% decline in September as lower gasoline prices, a firm loonie and weaker commodity prices weigh on industrial prices. The establishment employment survey (Thursday) will provide earnings and employment figures for September. The results are fairly dated, with the timely labour force survey showing a 44.4k surge in October jobs and a dip in the unemployment rate to 7.0% from 7.1%. Nevertheless, the employment figures from the establishment survey are of interest, as is the earnings figure. We expect average weekly earnings to rise 0.2% m/m in September after the 0.7% drop in August. Corporate profits for Q3 (Thursday) are also due out from Statistics Canada. The Bank of Canada’s Deputy Governor Lynn Patterson (Tuesday) conducts a presentation at the University of Regina Regina, SK. The appearance, which is part of the Bank’s regional outreach program, is the final scheduled event before the Bank of Canada’s interest rate announcement on December 2. We expect no change to the current 0.50% policy rate or to the growth and inflation outlook presented in October.

Europe: Preliminary November PMI readings (today) kicked off the week and the French PMI’s disappointed with the manufacturing reading managed to carve out a slight gain – to 50.8 from 50.6, but the services reading dropped sharply to 51.3 from 52.7, which saw the composite falling to 51.3 from 52.6 in October. The German PMI’s came in better than expectations and above the previous month’s figures: services 55.6 vs. median of 54.3, manufacturing 52.6 vs. median of 56 and composite 54.9 vs. median of 54. The German Ifo Business Climate index (Tuesday) is seen little changed at expected 108.3 (med 108.1), versus 108.2 in October. France and Italy also release November confidence data and the week ends with the release of the European Commission’s ESI Economic Confidence reading on Friday, where we look for a marginal improvement to 106.0 (median same) from 105.9 in October. The preliminary consumer confidence reading already surprised on the upside, but again, in the current climate, even better than expected numbers are unlikely to change Draghi’s course and weaker readings will only add to the doves’ arguments. The second release of German Q3 GDP is expected to confirm the 0.3% q/q growth rate reported with the initial release, leaving the focus on the breakdown, which will almost certainly show that for once German growth is boosted by consumption and domestic demand rather than net exports. Indeed, across the Eurozone, consumers are propping up the economy and despite the ECB’s deflation warnings, there is no sign that purchases are being postponed in anticipation of price cuts, on the contrary.

United Kingdom: The latest CBI distributive sales survey (Tuesday), BBA mortgage approvals (Wednesday), and Gfk consumer confidence and the second estimate for Q3 GDP (both Friday). We forecast the CBI retail survey showing an improvement in the headline realized sales balance for November, to +24 (median +25) from October’s +19 reading. Strong rises in real average household incomes and record levels of employment have and should continue to underpin the sector. BBA mortgage approvals for October should recover some of the unexpected dip seen in September data, to 44.5. We expect a reading of 45.5, which would still be short of the cycle peak seen in August, at 46.7. As for the Gfk consumer confidence survey, we anticipate an unchanged reading of +2 (median same). The second estimate Q3 GDP report is widely expected to show +0.5% q/q and 2.3% y/y growth, unchanged from the preliminary readings.

China: no data releases this week.

Australia: RBA Governor Stevens (Tuesday) speaks at the Australian Business Economists Annual Dinner. Assistant Governor (Financial Markets) Debelle speaks at the FX Week Europe conference in London (Wednesday). Australia’s calendar is highlighted by the Q3 private capital expenditures survey (Thursday), expected to reveal a repeat 4.0% drop (q/q, sa) after the 4.0% pull-back in Q2 as ongoing uncertainty over Australia’s growth prospects maintains caution on the part of firms.

Japan: Japanese markets are closed Monday for Labor Thanksgiving Day. The release schedule gets underway Wednesday with October services PPI, expected to dip to a 0.5% y/y pace versus the 0.6% outcome previously. Revised September leading and coincident indices (Wednesday) are seen unchanged from preliminary readings of -2.1% m/m and -0.3% m/m, respectively. CPI data (Friday) should show the October national headline inching up to a 0.1% y/y pace versus unchanged. The core reading is expected to fall to -0.2% y/y from the prior -0.1% outcome. November Tokyo headline is forecast unchanged at 0.1% y/y, with core seen steady at -0.2% y/y. October unemployment (Friday) will likely reveal an unchanged 3.4% rate, while the job offers/seekers ratio is seen steady at 1.24.

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