In the euro area, the focus will be on Wednesday’s Eurogroup. Q4 national economic data releases will show a slowdown in GDP growth……
Tuesday 14 February
Euro area
– Germany. The ZEW index, which measures the expectations of analysts and institutional investors for the German economy, may show an easing of pessimism for the third month in a row. However, the improvement will be smaller than in January (when the index recorded the sharpest monthly rise in the history of the series). We estimate the index to come in at -18, from -21.6 the previous month. On the other hand, the improvement in terms of the assessment of current conditions should be weaker, at 30.5 in our estimation, from 28.4 the previous month.
The drop in sovereign debt risk indices, and the strong trend of the stock markets, have probably supported confidence.
United States
– January retail sales should be up sharply, by +0.8% m/m, fuelled by automobiles, gasoline prices, and a widespread recovery following a weak December reading. Net of the auto sector, retails sales should be on the rise by 0.6% m/m. Data point to a likely acceleration of consumption in Q1 2012.
Wednesday 15 February
Euro area
– Preliminary Q4 GDP growth data are due out in Germany, France, Italy, and in the euro area on the whole. The estimate for the euro area should be for a -0.3% q/q decline, after a +0.1% rise (revised downwards by one –tenth) in the summer quarter. In the year as a whole, GDP growth would therefore slow from 1.3% to 0.8%, hitting a low since 2009. All the maineconomies are expected to incur a contraction in GDP, including Germany (to -0.3% from +0.5%, also due to a significant slowdown in investments, as well as of exports). GDP is estimate to be down in France as well, by -0.2% q/q from +0.4% q/q the previous month, pushed down by slower consumption and contracting investments. Lastly, Italy is once again expected to underperform, showing a contraction in GDP of at least -0.6% q/q, that would technically mark the official start of a recession (second consecutive quarter of negative growth, after the -0.2% q/q drop over the summer). The opening months of 2012 should also bring a contraction of GDP, of approximately the same size as at the end of 2011.
United States
Regional surveys continue to show a differential compared to levels compatible with the historical correlation with the ISM: this gap should gradually close. In January the Empire index was in comfortably positive territory, in terms of its individual components as well, with orders and jobs making strong progress. Manufacturing sector indices remain on a positive path that should be confirmed in the months ahead.
– Industrial output should be up in January by 0.8% m/m, with production in the manufacturing sector performing even better (+1.1% m/m). Data on employment and work hours contained in the employment report point to strong growth in the manufacturing sector (especially in terms of overtime, jobs up by 50k). The manufacturing sector is on a sustained growth path, which should be confirmed in the months ahead, as also indicated by the strong trend of durable orders in December. Milder weather than usual should result in a correction for utilities.
– The Fed will publish the minutes of the FOMC meeting of 24-25 January. As a result of the new communication strategy adopted in January, most of the important information has already been made available on occasion of the press conference, and through communiqués and projections. However, the minutes could contain further details on the Fed’s availability to intervene with new stimulus despite gradually improving data on activity and employment. In Bernanke’s testimonies following the publication of relatively positive data, no change in tone was perceived compared to the press conference, leaving open the door for QE3 if, as is currently the case, the Fed continues to forecast inflation at stubbornly lower levels than the target rate, and an unemployment rate that is still well off its normal levels.
Thursday 16 February
United States
– Housing starts should rise in number in January to 685k, after dropping sharply and unexpectedly in December (-4.1% m/m). The weather was generally mild in January, and activity in the construction sector increased, based on the information on job gains in the construction sector included in the Employment Report. Housing licences are expected to show an increase, to 675k from 671k (revised downwards from 679k) in December.
– The Philadelphia Fed index is forecast to rise to 10 from 7.3 in January. Like the Empire index, for some time now the Philly Fed has also been on lower levels than predictable based on the correlation with the ISM. The January Philadelphia Fed survey was not particularly positive, and showed deteriorating deliveries, orders, and order books, with stable employment. In light of strong data across the board in the manufacturing sector, we expect the index to show a clear improvement in February.
Friday 17 February
United States
Appendix
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