In the euro area, focus will stay on the developments of the debt crisis, in Greece especially, and on the ECB meeting. Economic data releases will confirm the (recessionary) values of end-201 GDP growth and the February PMI survey…..
The calendar economic data releases has few but important data this week in the United States. Non-farm payrolls should record a rise in line with the average for the past three months, and the unemployment rate should stay stable at 8.3%, confirming the slow recovery of the labour market. The non-manufacturing ISM index is forecast around stable in February. The second estimates of productivity and cost of labour at year-end 2011 should be broadly unchanged.
Monday 5 March
Euro area
The second reading of the February PMI should confirm the flash estimate, with the services index down to 49.4 from 50.4; considering that the manufacturing index improved from 49 to 48.8, the composite index should be confirmed at 49.7, on the decline from 50.4 the previous month. The PMI index is consistent with GDP growth heading around zero; confidence indices point to a stabilisation, but not yet a recovery, in productive activity.
Retail sales are expected to rebound by 0.5% m/m in January, after sliding by -0.3% m/m in December. The index should be driven primarily by France, where sales net of autos increased by 2.1% m/m. In any case, year-on-year growth will remain negative, and, based on the trend of consumer confidence, a recovery is unlikely in the short term.
United States
The non-manufacturing ISM is forecast at 56.5 in February, from 56.8 in January. The January survey was very strong, and showed activity to be at its highest levels since February 2011 (to 59.5 from 55.9 in December). Orders and employment had also risen sharply. The Beige Book points to stability in the non-financial services sector, which indicates a likely stabilisation of the overall ISM non-manufacturing index on January’s high levels.
Tuesday 6 March
Euro area
The second reading of Q4 GDP data should confirm the -0.3% q/q flash estimate, marking the first negative change in two-and-a-half years. All the main components are expected to have contracted in the quarter, starting with investments (-0.6%), and on to both private and public consumption (both down by one-tenth, based on our estimates). GDP in the region is expected to drop in the present quarter as well, although the contraction may prove smaller than the one seen at the end of 2011.
Wednesday 7 March
Euro area
Germany. Factory orders may slow to 0.9% m/m in January, vs. +1.7% m/m in December. The year-on-year change would in any case turn negative, to -1.3% from +0.1% y/y the previous month. The recent resilience displayed by the IFO index, also with regards to enterprises’ assessment of the orders trend, indicates that the slowdown of industrial activity in Germany is modest, mostly thanks to non-EU exports.
United States
Consensus estimates place ADP private sector non-farm payrolls in February at 200k, up slightly vs. January (170k). The January estimate proved lower than the actual employment report figure (+257k).
Productivity growth in Q4 should be revised upwards, to +0.9% q/q from an initial estimate of 0.7% q/q, in light of the revision of GDP growth. The cost of labour per product unit should come in just shy of +1.1% q/q, from 1.2% q/q.
Thursday 8 March
Euro area
After the second 36-month repo, we believe the ECB will take some time to assess the effects of the massive injection of funds on market conditions. The ECB will not make any announcements this week, but will keep all options open, signalling its willingness to intervene again in case of renewed pressures. A refi rate cut to below 1.0% is unlikely, given the signals of a stabilisation and the strong improvement in the balance of risks prompted by the 3-year repos. A zero rate on deposit might be a way to enhance liquidity but signals in this direction are unlikely to come already at this week meeting.
Germany. Industrial production is expected to rebound in January (by 0.7% m/m in our estimation) after the anomalous December decline (-2.9% m/m). The year-on-year ch’ange should in any case slow (to 0.8%). In Germany as well, the trend of industrial activity is still slowing, although less so than in the rest of the euro area.
Friday 9 March
Euro area
France. Industrial production is expected to rebound by at least 0.5% m/m in January, after plunging in December (-1.4% m/m). The year-on-year change should in any case be limited to -1.1%, vs. -1.3% the previous month. Confidence surveys continue to point to a slowdown in orders and production, which will reap effects in the months ahead.
Italy. Industrial production is forecast to have contracted by at least -1.8% m/m in January, after its surprise rebound (very probably due to seasonal adjustment anomalies) in December. The year-on-year change would in any case stay in negative territory, at -0.5% unadjusted and -3.5% adjusted by workdays. As a further contraction is expected in February, due to disruptions caused by truck driver strikes and bad weather conditions, the quarterly trend is on course for a further decline, after the -2.1% q/q rate recorded in the closing quarter of 2011.
United States
The Employment Report should show an increase in non-farm payrolls of 210k. Jobs added in the private sector are forecast at 225k. The breakdown by sector should show a change in services approximately in line with January (+170k), as opposed to a smaller increase in manufacturing, and in the construction sector especially. In January, new industry jobs were 81k, also supported by particularly mild weather conditions; in February, industry employment should increase by close to 30-40k. The unemployment rate should be unchanged at 8.3%, and the participation rate may rise back up from the new low reached in January (63.7%). Hourly wages are expected to be up by 0.2% m/m, confirming a slower trend than inflation on a year-on-year basis.
In January the trade balance is estimated to show a deficit of 49 billion dollars, broadly in line with the December figure (-48.8 billion), marking the third consecutive widening of the deficit. Imports mostly reflect the rise in oil prices, while exports are slowing as a result of weakening global demand. The foreign channel’s contribution to growth should be of around zero also in Q1 2012, in line with the end of 2011.
Appendix
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