In the Euro area, the ongoing uncertainty over the crisis in the second half of November will have further dented confidence. We expect the December ZEW to fall to -59. In France, the INSEE index is put at 95 vs. 97 before....…
The coming week is packed with data and events in the United States. The first December manufacturing surveys should show improvements. November retail sales should be solid, while industrial production is expected to be little changed. November prices will be impacted by the fall in energy prices, while the inflation dynamic should remain modest month-on-month. The FOMC meeting will likely prepare the market for major changes in the communication strategy which should come into force in January.
Tuesday 13 December
Euro area
France. Consumer prices should have remained broadly steady in November, thanks to the cooling of energy prices. Inflation is expected to fall by one-tenth to 2.2% yoy on the national measure and to 2.4% yoy on the harmonised measure. French inflation should fall back below 2% as of February-March 2012.
Germany. The ZEW index should have been further hit by the market turbulence, falling to -59 from -55.2 before, not far off the July 2008 low (-63.9). The present situation index is estimated at 30 vs. 34.2 before.
United States
November retail sales should be up 0.7% mom. The Thanksgiving weekend sales data were very positive, although overall the results of weekly sales during the month were mixed. One strength should once again be autos, which were up 3% mom in November. Petrol sales should be down slightly on the price effect. Sales ex auto are expected to surge by +0.5% mom. The acceleration in sales in 2011 vs. the corresponding month during the years of recession and tentative recovery might boost the seasonally-adjusted dynamic this year.
The FOMC meeting should clear the way for major changes in the communication strategy which should come into force in January. The committee will again discuss the changes already debated in November. The December statement will likely signal that as of January the information annexed to the macroeconomic projections will be considerably expanded. According to the minutes, January should bring a new statement giving guidance on the monetary policy goals in respect of prices and unemployment, together with the rates path underlying the macro projections. Should the arrival of a revolution in communication strategy be announced, this would clear the way to signalling rates on hold probably through to yearend 2014 and to preparing a possible QE3 programme to be implemented after January 2012, if appropriate.
Wednesday 14 December
Euro area
Industrial production should have stagnated in October; if confirmed, the figure would leave the drag-on effect for 4Q11 at -0,8% qoq. The sentiment surveys continue to signal a deterioration in the macro situation at around year-end/early 2012.
United States
Import prices should be up 0.3% mom in November, after -0.6% mom in October. The oil price should show a small increase after four straight contractions. The trend dynamic is cooling and should fall below 10% yoy, from 11% yoy in October.
Thursday 15 December
Euro area
The Eurostat detailed estimate should confirm Euro area inflation at 3.0% yoy and show the underlying dynamic at 2.0% yoy, unchanged from October. Euro area inflation is expected to fall back below 2% by June 2012. The abundant slack in the economy should contain the pressures on costs, pay and prices.
We expect the Euro area employment dynamic to slow to 0.2% qoq from 0.3% qoq before. The crisis will impact on the labour market dynamic during 2012 and a fall in payrolls in the course of next year cannot be ruled out.
United States
The PPI should be up 0.1% mom in November, after -0.3% mom in October. The trend in prices highlighted by the prices component of the ISM is unequivocally downward, after the upward pressures largely due to commodity prices. Energy in November should have a slight negative effect, while the core rate might show a modest bounce of +0.2% mom, driven by the auto sector, following the steep falls in auto prices seen in the previous three months.
The Empire index should continue to rise, climbing to 8 in December from 0.6 in November. The gap between Empire and ISM should narrow, after several months in which the NY Fed survey had remained well below the level expected on the basis of the historical relationship between the two surveys. The manufacturing sector will continue to show solid expansion.
Industrial production is expected to be up a modest 0.1% mom in November in light of the relatively weak activity data implied in the hours worked figures contained in the employment report. The data partly reflect the effects on supply due to the floods in Thailand, notably in the auto sector. Other sectors too might be adversely affected, albeit to a lesser degree. The ISM survey showed a large gain in November in output, which rose to 56.6 from 50.1, but the data are affected by the adjustment following the Japanese earthquake.
The Philadelphia Fed index should rise to 8.5 in December, from 3.6 in November. Last month the survey recorded falling levels not just in the general index but also in several components (notably, orders and deliveries), whereas on the payrolls front the index was up. The indications from the manufacturing sector have remained generally positive, and we therefore expect an upturn in the index in line with the level seen in November for the ISM.
Friday 16 December
Euro area
The labour cost dynamic should have remained roughly at the 2Q11 levels, expanding by 3.4% yoy vs. 3.6% yoy before. During 2012 we expect costs to cool on the back of the cycle slowdown and only marginally from measures intended to turn around productivity.
France. The manufacturing business confidence index should have slipped further to 95 from 97 before. The composite indicator is back below the long-term mean and is consistent with a slowdown in manufacturing activity at year-end. The index is still well above the March 2009 low (69).
United States
The CPI should be unchanged month-on-month in November, showing a fall in energy due to the correction in the petrol price. The core index should be up 0.2% mom on the ongoing acceleration in housing, and notably rents. Auto prices should stabilise after the previous month’s correction. In trend terms, the core CPI should show a fresh increase to 2.2% yoy, from 2.1% yoy in October, returning to the level seen in October 2008.
Appendix
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