Economic week ahead: Metamorphoses
A change in leadership in the United States and China - the world's two biggest economies - will see a transformation in fiscal and monetary policies.
In the week ahead, the United States will elect a president and China's political elites will select a new leader. Greece's Parliament will hold a make-or-break vote on austerity measures, the European Central Bank will meet and Spain will auction debt. And those are just the highlights. Here is your complete guide.
Tuesday's election in the United States is the stand-out item on this week's calendar. The contest for control of the White House and Congress – which has broad implications for the future direction of America's fiscal and monetary policies – will easily overshadow the other events on the country's sparsely populated economic calendar this week. Nevertheless, a few data points are worth noting.
On Monday, the Institute for Supply Management (ISM) will release its non-manufacturing purchasing managers' index (PMI). The index is expected to decline, likely falling from 55.1 in September to 54.5 in October.
On Tuesday, the Energy Information Administration will release its short-term energy outlook.
On Wednesday, analysts surveyed by Dow Jones expect the federal reserve's most recent consumer credit data to show that consumer debt grew by $11-billion in September following an $18.1-billion expansion in August.
On Thursday, markets expect weekly initial jobless claims to show a slight uptick, from 363 000 to 365 000. Separately, government trade data is expected to show that America's trade deficit widened slightly, from $44.2-billion in August to $45-billion in September.
Finally, on Friday, the bureau of labour statistics will report last month's import price information, the University of Michigan will release its latest consumer sentiment data, and the US Commerce Department will report on September's wholesale inventories.
Import prices are expected to have remained flat in October after rising 1.1% in September. Consumer sentiment is expected to rise marginally and wholesale inventories may rise 0.4% after rising 0.5% in August.
The European Central Bank and Bank of England (BOE) will hold meetings this week. The majority of economists responding to a Reuters survey said that they expected the central bank to keep its refinancing rate on hold at 0.75% on Thursday.
Analysts are not expecting much from officials at the Bank of England this week either. Following recent news that the United Kingdom exited recession in the third quarter, markets believe that policymakers will leave rates on hold and refrain from adding to the bank's £375-billion quantitative easing programme. But if Monday's PMI comes in below market expectations, some analysts believe that a £50-billion expansion to the scheme is possible at Thursday's meeting.
Beyond these two meetings, European markets will be keeping a close eye on developments related to the continent's ongoing debt crisis.
Greece's Parliament is set to vote on new austerity measures on Wednesday. The country needs to pass €13.5-billion in additional spending cuts and tax increases in order to receive its next tranche of external financial aid. Without these funds, it will run out of money later this month, possibly default on its debt and find itself out of the eurozone.
As the week draws to a close, Spain will auction three-, five- and 20-year securities. Friday's sale will mark the first time since July 2011 that the country has auctioned debt with a maturity longer than 10-years. Spain's bonds are rated one notch above non-investment grade with a negative outlook.
China – the world's second-largest economy – is likely to dominate Asia's economic news this week as the country's Communist Party begins its once in a decade leadership transition. The Communist Party's 18th Congress will begin on Thursday in Beijing, ushering in the so-called "fifth generation" of leaders since the communists took over the country in 1949.
Vice-President Xi Jinping – a member of the Politburo and vice chair of the Central Military Commission – is widely expected to succeed Hu Jintao as head of the party and state president. Analysts expect Vice-Premier Li Keqiang to replace Premier Wen Jinbao.
China's new leaders will inherit a host of economic challenges. The country is likely to record its lowest level of economic growth in over a decade this year. As officials meet, investors will mull over a new batch of economic indicators. Officials will release inflation, industrial production, retail sales and fixed investment data on Friday.
Markets expect consumer price (CPI) index data to show that consumer inflation remained flat at 1.9% year on year growth in October. Producer inflation – as recorded by the producer price index – is expected to have fallen by 2.8% last month, following a 3.6% fall in September.
Industrial production is expected to have picked up to 9.4% year on year growth in October from 9.2% growth in September. Retail sales are predicted to record year on year growth of 14.3% and fixed investment is forecast to rise marginally, to 20.6% annual growth year to date.
On Monday, Argentina will release budget figures, Venezuela will report vehicle sales, Mexico will release consumer confidence data and Chile's central bank will release its latest economic activity index.
Mexico's consumer confidence fell to its lowest level in nine months in September and is expected to have deteriorated further in October. Chile's economic activity index is expected to show that economic activity rose 3.2%, year on year, in September following 6.2% growth in August.
On Tuesday, Argentina will report vehicle sales volumes and Venezuela will report inflation data. Markets expect Venezuela's CPI to show an 18.1% rise for October, up slightly from September's 18.0% increase.
On Wednesday, Brazil, Colombia and Chile will report vehicle sales figures. Chile will also report trade figures. Mexico will report gross fixed investment data and Brazil will release its commodity price index.
Economists expect Chile to report a $100-million trade surplus for October, following September's $37-million deficit. Mexico's fixed investment is expected to have risen 4.5%, year on year, in August. Brazil's commodity price index is expected to have fallen 1.2% last month following a slight 0.29% rise in September.
On Thursday, Chile will release inflation figures, Mexico will report inflation and vehicle sales and Peru will issue its latest monetary policy decision. On a monthly basis, consumer inflation is expected to have eased slightly in Chile but to have risen slightly in Mexico. Peru's central bank is widely expected to leave the country's benchmark rate on hold at 4.25%.
September's mining production data will dominate South Africa's economic calendar this week. The mining sector in Africa's largest economy has been plagued by months of violent labour disputes that have significantly curtailed production. Output fell 3.3% in 2012 through August and markets expect Thursday's data from Statistics South Africa (Stats SA) to make for further grim reading.
The wildcat strikes that began in August have affected the country's platinum, gold, chrome, coal and iron ore mines. Collectively, the labour unrest has cost R10.1-billion in lost mining production this year, according to the national treasury.
In addition to September's mining figures, this week will see the release of October's foreign reserves totals from the South African Reserve Bank and business confidence index (BCI) readings from the South African Chamber of Commerce and Industry (Sacci) on Wednesday. Manufacturing production and sales figures from Stats SA will follow on Thursday.
Elsewhere on the continent this week, Morocco will report the country's third quarter unemployment rate, Mauritius will release October's consumer inflation figures, Uganda will report foreign reserves, Egypt will report gross official reserves and Kenya will announce its latest rates decision.
The Central Bank of Kenya will announce its decision on Wednesday. Declining inflation and a stable shilling – the local currency – have allowed officials to cut the bank's benchmark interest rate by 500-basis points since July. And with inflation continuing to trend downward – having fallen to 4.14% in October from 5.32% in September – markets expect further policy easing at this week's meeting.
Matt Quigley writes a weekly economic preview for the Mail & Guardian Online. You can follow him on Twitter at @mattquigley.