Business

Economic week ahead: Data dominates

Matt Quigley

A data deluge in the US, growth figures for China and Germany, and inflation data from the eurozone are the highlights on the economic data calendar.

Egypt will resume negotiations with the International Monetary Fund this week to agree to terms on a $4.8-billion financing package. (AFP)

Also on the calendar are highlights of the industrial production from the eurozone, while closer to home purchasing managers’ index readings, mining production and retail sales figures dominate South Africa’s diary. Here is your guide.

North America
The week ahead is packed with data from the United States, the world’s largest economy. Markets will get updates on the country’s retail, industrial and housing sectors as well as reports on inflation and consumer sentiment, among others.

On Tuesday, the producer price index is expected to show a 0.1% drop in December following a 0.8% decline in November. Economists surveyed by Dow Jones expect December’s retail sales data to show a disappointing 0.2% gain, down from a 0.3% rise in November.

On Wednesday, December’s consumer price index (CPI) is predicted to show a flat reading following November’s 0.3% drop. Industrial production is expected to have risen 0.3% in December, down from November’s 1.1% increase and capacity utilisation is forecast to rise slightly.

On Thursday, weekly data covering initial jobless benefit claims are forecast to show that 370 000 people filed for benefits in the week ended January 12, down from 371 000 in the previous week. December’s housing starts are expected to show a 2.8% uptick following November’s 3% decline and the number of building permits issued in the month are expected to have risen 0.6%, down from a 3.7% rise in November.

Finally, on Friday, the University of Michigan’s consumer sentiment index is forecast to rise to 75.5 from its prior reading of 72.9.

Also this week, earnings season gets fully underway. In total, 34 of the 500 companies in the S&P 500 Index – including some of the country’s largest financial institutions – will report earnings.

Europe
Europe’s will begin with the release of November’s industrial production figures for the eurozone and Italy on Monday. Markets expect the eurozone data to show that output in the 17-country currency bloc fell 3.1%, year-on-year in November – representing a slight improvement on October’s 3.6% decline. Industrial production in Italy is forecast to show a 0.5% monthly decline, an improvement on October’s 1.1% fall.

On Tuesday, Germany – the continent’s largest economy and industrial powerhouse – will release fourth quarter gross domestic product (GDP) data. Markets are not optimistic. Economists are expecting to see a contraction of between 0.2% and 1%. Germany’s Economy Minister, Philipp Roesler, said last week that the country’s economy probably grew by 0.75% in 2012 as a whole.

Also on Tuesday, the United Kingdom’s most recent consumer inflation data is likely to show that the country’s CPI rose 2.9% in December, up from a 2.7% in November.

On Wednesday, markets will turn their attention to the eurozone’s consumer inflation figures. Economists expect the data to show signs of reemerging inflation, with the harmonised index of consumer prices (HICP) likely having risen 0.3%, month on month, in December following a 0.2% decline in November. 

On Friday, the UK’s Office for National Statistics will release December’s retail sales figures. Excluding automotive fuel, economists expect anaemic growth of 0.1%, month on month, in line with the mixed trading updates markets have received from individual high street vendors. 

Asia
China will dominate Asia’s economic data calendar this week, but markets will have to wait. The world’s second largest economy will not release retail sales, industrial production, urban fixed asset investment and GDP figures until Friday.

Most economists expect Friday’s GDP figures to mark the end to seven consecutive quarters of slowing expansion. Economists surveyed by AFP forecast the world’s largest economy expanded by 7.8%, year-on-year, in the final quarter of 2012, up from 7.4% growth in the previous quarter, the lowest growth rate since early 2009.

Economists at Lloyds Bank expect low inflation contributed to an increase in consumer spending in December, pushing retail sales to 15.1% year-on-year growth in the final month of the year following a 14.9% rise in November. Industrial output, driven by solid domestic demand, is expected to register a 10.4% year-on-year rise in December, up from 10.1% in November. Markets expect urban fixed asset investment to hold steady in December at 20.7% growth, year to date.

Elsewhere in the region, Japan’s Cabinet office will release November’s machinery orders data – a leading indicator of capital spending – and the Bank of Japan will release its corporate goods price index (CGPI) for December on Wednesday.

Economists surveyed by Market News International expect core machinery orders to show a 0.8% month-on-month rise following a 2.6% uptick in October. The CGPI is expected to register a 0.7% year-on-year decline, its ninth consecutive monthly drop.

Latin America
A series of central bank meetings will dominate Latin America’s economic news this week as officials in Brazil, Chile, Mexico and Colombia announce their latest monetary policy decisions.

Brazil’s central bank is widely expected to leave interest rates on hold at a record low 7.25% following Wednesday’s policy meeting. Most economists expect officials, having shaved 525-basis points off Brazil’s benchmark Selic rate in just over a year, to leave rates unchanged for the remainder of 2013.

Despite a rise in inflation, the bank remains concerned with lacklustre growth. Monthly GDP proxy data, also scheduled for release on Wednesday, is expected to show that the country’s economy expanded by a mere 0.13%, month-on-month in November. Economists at Itaú BBA expect GDP growth to drop to 0.9% for 2012 as a whole.

On Thursday, Chile’s central bank is also expected to keep the country’s nominal overnight lending rate on hold at 5%. Traders and investors responding to the bank’s most recent biweekly survey forecast stable rates at least through July, but expect a 25-basis point hike sometime before January 2014.

Finally, on Friday, central bankers in Mexico and Colombia will announce their decisions. Markets expect Mexican officials to leave the country’s overnight rate unchanged at 4.5% after consumer inflation dipped below the central bank’s 4% ceiling last month for the first time in seven months. Colombia’s low inflation rate has prompted predictions that policymakers will further reduce interest rates – by a quarter percent – to 4%.

Middle East and Africa
Egypt will resume negotiations with the International Monetary Fund this week. Officials are attempting to agree to terms on a $4.8-billion financing package viewed as crucial to regaining investor confidence in the troubled North African economy.

Egypt needs to repay more than $1-billion in debt obligations over the next two months, $900-million of which are due in January.

Egypt’s currency slid to a record low last week, despite Qatar’s pledge of an additional $2.5-billion in aid to help officials tackle a currency crisis. The pound has lost 10.7% of its value since the 2011 uprising that threw president Hosni Mubarak from power and economists fear that, without an IMF loan, Egypt’s currency could face a “disorderly devaluation”.

Elsewhere on the continent, Morocco will release December’s CPI figures on Tuesday and South Africa – Africa’s largest economy – will release a slew of data this week. Things kick-off on Monday with purchasing managers’ index readings from the Bureau of Economic Research, November’s trade statistics, Absa’s housing price index for December and the South African Chamber of Commerce and Industry’s December trade conditions survey.

November’s mining production figures will follow from Statistics South Africa on Tuesday. The agency will release November’s retail trade numbers on Wednesday and civil cases for debt, wholesale trade and motor trade data on Thursday.

The BER’s fourth quarter civil confidence index and Spark ATM Cash Index for December will close out the week on Friday.


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