In the euro area, focus will be on the Eurogroup and on the inaugural meeting of the ESM, as well as obviously on the possible unblocking of the impasse in Spain and Greece…….
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available in Germany, Italy, and Spain).
Monday 8 October
Euro area
– Germany. August industrial output is expected to be down in the month, after the surge recorded in July (+1.3% m/m). We expect a three-tenth drop, which would translate into only a slight change in the annual rate (to -1.3% y/y). Output would stay on course for a recovery in the Summer quarter, after stagnating in the Spring, although the recent trend of the IFO index indicates that output will continue to slow at least until the end of the year.
– The Eurogroup is expected to adopt a decision modifying the conditions underpinning assistance to Portugal, with a view to disbursement of the next instalment of financial assistance, following a review of progress by Portugal in implementation of its economic adjustment programme. Spain and Greece will also be discussed, although decisions on this front are unlikely to be made. The Eurogroup-Ecofin agenda will also include a discussion on the introduction of a financial transaction tax, and on possible changes to the European Semester monitoring exercise, as well as preparation of the G-20 Finance Ministers’ and of the annual meeting of the IMF and World Bank Group. The Eurogroup will be preceded by the inaugural meeting of the board of governors of the ESM.
Wednesday 10 October
Euro area
– France. Industrial output is expected to have dropped by two-tenths in August, therefore by exactly the same amount gained in July. On an annual basis, output would drop to -3.8%, returning to the levels hit in May, the lowest since 2009. Output is on course for a similar decline in the summer quarter as was recorded in the previous two (-0.5% q/q).
– Italy. Industrial output is expected to have dropped again in August, in our estimation by fourtenths month-on-month. In annual terms, output would slip back to -6.7% (from a previous rate of -4.4% unadjusted, and -7.3% adjusted by workdays). Third quarter of the year should bring a drop in output of just over one per cent, marking an improvement from -1.7% q/q in the previous quarter. Based on the level of survey indices and on financial conditions, output
could continue to contract until the end of 1H 2013.
United States
– The Fed will publish the Beige Book ahead of the November FOMC meeting. The report should show that economic activity growth is still moderate, with a modest recovery in the manufacturing sector and weak exports. The residential construction sector should again be singled out as the main driver of growth. Indications on prices and the labour market should be in line with the previous: no pressure on prices and wages, and contained employment growth.
Thursday 11 October
Euro area
– France. Inflation is estimated to have dropped by one-tenth in August, from 2.1% to 2% at the national level, and from 2.4% to 2.3% for the harmonised rate. In the month, prices are estimated to have dropped by two-tenths for the national index, and one-tenth at the harmonised level. A drop in fuel prices is expected to have added itself to already favourable
seasonal effects. Prices should moderate significantly in the months ahead.
– Germany. Inflation should slow again in September, by one-tenth to 2% at the national level, and to 2.1% in harmonised terms. The decline in prices in the month should be confirmed at two-tenths for the national index, and three-tenths for the harmonised index. In Germany as well, we expect inflation pressures to moderate in the months ahead.
– Spain. The second reading of September inflation should confirm the preliminary estimate of 3.5%, from 2.7% in August (both for the national and harmonised indices). A good part of the 2% VAT hike seems to have already been transferred downstream. Inflation still has a margin to rise between now and the end of the year.
United States
– Import prices are estimated to have risen by 0.7% m/m in September, on a par with August.
The increase is being driven by the rise in oil prices, but should also be visible net of the latter, as a result of the weaker dollar. Export prices should experience another strong rise, fuelled by higher agricultural commodity prices.
– The trade balance should show a widening of the deficit to 43.8 billion in August, after the stabilisation seen in July (at 42 billion). The deficit will be affected higher oil prices, which should inflate nominal imports (+1.4% m/m). As regards exports, weak global demand, with both Europe and Asia at the fore, should result in modest nominal growth, despite new increases in the agricultural sector export prices.
Friday 12 October
Euro area
– Italy. Inflation should be confirmed at 3.2% in August for the national NIC index, and at 3.4% at the harmonised level; prices were stable based on the national index, and accelerated sharply in harmonised terms (by 2.1% m/m). In the month, sharper than expected price increases were recorded in food (+0.6%), hotel and restaurant services (+0.5%), and
spending for the home (+0.4%). Prices decreased less than expected in the leisure sector (- 0.5%), whereas education prices rose broadly in line with the typical seasonal trend (1.1%); vice versa, the decline in transport prices was sharper than expected (-1.3%), and prices in the clothing & apparel and health services sectors remained stable, as opposed to expectations for an increase. An interesting aspect is that inflation on high-purchase-frequency goods (which affects consumer perception of inflation) soared to 4.7%. However, we stick to the idea that between now and the end of the year inflation could come down by a few tenths.
– Industrial output in the euro area as a whole should drop again in August, by three-tenths, after rising by half a point in a July. This should translate into a 4% year-on-year contraction, vs. -2.7% in July, marking a low since 2009. In any case, output is on course for a stabilisation in 3Q 2012, after declining in the three previous quarters.
United States
– The September PPI is estimated to show a 0.8% m/m rise. The index will be driven by higher gasoline and food prices, inflated by increases in the agricultural commodity segment. The core index should keep up its pace of growth of +0.2% m/m.
– October consumer confidence, as surveyed by the University of Michigan (preliminary), should drop slightly, to 77.8 from 78.3 in September (final). A modest correction of the stock market, combined with the increases in gasoline price recorded at the end of September, and a still weak labour market, should result in confidence stabilising on levels close to those seen last spring.
Appendix
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