The economic calendar has lightened due to the holidays, but a few key events will still keep investors on their toes when trading resumes.
The economic calendar is light in the holiday-shortened week ahead, but a few key events will still attract widespread attention. American and Chinese inflation data, European industrial growth figures and South African manufacturing stats are among the scheduled releases likely to keep investors on their toes when trading resumes on Tuesday.
Markets will be listening even more carefully than usual to the words of America’s monetary policymakers this week. Following last week’s disappointing jobs report, economists and investors will be seeking clarity on the central bank’s economic outlook and willingness to pursue another round of stimulus activity, should the need arise.
With numerous federal reserve officials scheduled to speak publicly in the week ahead, economists and investors will have plenty of views to decipher.
Federal reserve chairperson Ben Bernanke will address a conference on Monday where three of the reserve’s 12 regional bank presidents will talk on Tuesday. Three more—along with Janet Yellen, the reserve’s vice-chair—will speak on Wednesday. And, on Thursday, New York reserve president William Dudley will join the chorus.
On the data front, two key inflation measures—scheduled for release on Thursday and Friday—are this week’s highest profile data points.
Economists surveyed by Bloomberg expect Thursday’s producer price index figures to show that wholesale prices edged up 0.3% in March following a 0.4% rise in February. Consumer price index data—scheduled for Friday—is expected to show that the rate of price rises facing American consumers also slowed from 0.4% in February to 0.3% in March.
Finally, as the week draws to a close, markets will be watching to see how consumer sentiment is holding up. Analysts expected the Thomson-Reuters/University of Michigan consumer sentiment index for the first half of this month to remain unchanged from March’s final reading.
Last week, economic data showed that industrial production in Germany—the continent’s largest economy—declined 1.3% from January to February, a larger drop than markets had expected. A separate release showed that manufacturing in the United Kingdom—the continent’s third largest economy—also declined for the second month in a row. This week may bring more bad news.
On Tuesday, analysts expect government figures to show that France’s industrial output increased a mere 0.2% in February after growing 0.3% the month before. This would translate into a 1.7% decline in output, year on year, for the continent’s second largest economy.
Industrial production statistics for the eurozone as a whole will follow on Thursday. Economists expect to see a 0.1% monthly decline in output for the distressed currency bloc. On an annual basis, output is forecast to have fallen 1.5% in February, following a 1.2% dip in January.
Ten European countries are already in recession and recent purchasing managers’ index (PMI) readings have pointed to a further slowdown for the region. Confirmation of these expectations from poor data this week would be unwelcome news to policymakers and investors alike.
After calming during the first quarter of 2012, Europe’s debt crisis appears to be flaring up again. Last week, Spain struggled to raise funds at a bond auction, the first since the country announced a €27-billion deficit reduction package. Spain sold only €2.6-million of the €3.5-billion in medium-term debt securities it had hoped.
Early on Monday morning, Chinese officials released two key inflation gauges. Producer price inflation was down 0.3% on the year, but consumer inflation unexpectedly spiked 3.6% in March, data showed.
Analysts pointed to rising food prices as the primary driver of the overall rise in the country’s consumer price index and continue to believe that inflation in the world’s second largest economy—despite the unforeseen acceleration last month—is still trending downwards.
China tightened monetary policy significantly last year in the face of rising prices. Officials raised interest rate five times and increased banks’ reserve requirements 12 times in 2010 and 2011. Easing inflation would provide policymakers more room to manoeuvre in the face of slowing economic growth.
Markets will get an answer to just how much slowing has occurred on Friday when officials release gross domestic product figures for the first three months of 2012. Economists expect the release to show that growth slowed to 8.4% in the first quarter of 2012 from 8.9% in the last quarter of 2011.
Also on Friday, industrial production statistics are expected to show a slight decline in monthly output growth from 11.4% to 11.3%. Annual retail sales growth is also forecast to remain essentially flat, rising only slightly from 14.7% in February to 14.8% in March.
Last week, the Bureau for Economic Research’s purchasing managers’ index (PMI) retreated from a reading of 57.9 in February to 55.1 in March. This week, manufacturing figures from Statistics South Africa are likely to similarly give back some ground.
On Wednesday, analysts expect manufacturing figures to show that production in February expanded by 2.7% versus 2.4% the previous month.
Elsewhere on the calendar, the South Africa Reserve Bank will release gold and foreign exchange reserve data and Absa will release its March housing price index on Tuesday. Stats SA will release mining production statistics for February on Thursday.
Matt Quigley writes the weekly economic preview for the Mail & Guardian. Read his blog on the South African economy here.