Economic week ahead: SA retail sales, China trade
This week will bring retail sales figures from South Africa and the US, China's latest trade figures and a possible clarification of the Bank of England's policy intentions. Here is your complete guide to the data releases, central bank meetings and other events to watch over the coming days.
Statistics South Africa will release fourth quarter labour statistics and December's manufacturing production figures on Tuesday. Consensus is that the government's latest jobs figures will show that roughly one in four people in Africa's largest economy remain unemployed. Analysts at 4CAST expect manufacturing production to have risen 2.2% from a year earlier in December, up from a 0.3% year-on-year rise in November.
South Africa's latest retail sales figures – scheduled for release on Wednesday – are likely to show that the pace of consumer purchases slowed from 4.2% year-on-year growth in November to 2.7% growth in during the final month of 2013. December's wholesale trade, mining production and motor trade figures will follow on Thursday.
Elsewhere on the continent, inflation figures will dominate the data diary. Egypt will release December consumer price index (CPI) data on Monday. Ghana's numbers will follow on Tuesday. Readings from Senegal and Angola are also expected sometime over the coming days.
The only African central bank to meet this week will be the Banco de Moçambique. Policymakers will announce their benchmark rates decision on Wednesday.
Mozambique's monetary policy committee cut their benchmark interest rate by a total of 125-basis points in 2013, but decided to leave rates unchanged at 8.25% at their January meeting. With inflation risks rising – the effect of previous rate cuts, relatively high levels of money supply and credit growth over recent months and some base effects – officials are likely to remain cautious this week.
All eyes will be on new Federal Reserve chair Janet Yellen over the coming days as she makes her first public comments on the state of America's economy and monetary policy since taking over from Ben Bernanke last week. She will testify before the House of Representatives's Financial Services Committee on Tuesday and before the Senate's Banking Committee on Thursday.
Yellen served as vice-chairperson of the Federal Reserve for a little more than three years of Bernanke's eight-year stint at the head of the table and was a regional bank chief within the system prior to that. She is widely expected to continue in the same vein as her predecessor, gradually winding-down stimulus and maintaining ultra-low rates until unemployment recedes.
On the data docket, last month's retail sales figures, scheduled for release on Thursday, and December's industrial production tallies, scheduled for Friday, are the big items this week. Both are likely to show lacklustre performance.
The commerce department is expected to report that retail sales were flat in January, after rising 0.2% in December, offering more evidence that the world's largest economy got off to a slow start in 2014, partially as a result of an extremely harsh winter. January's figures are viewed with particular interest. A high number of shoppers redeem gift cards received in December in January, so analysts view the month as the close of the all-important Christmas shopping season.
Friday's industrial output numbers are expected to show a 0.3% monthly increase, the same rate of increase recorded in November. The manufacturing sector, specifically, is expected to post a 0.1% monthly increase, down from a 0.4% monthly rise previously.
On Wednesday, Germany's economy ministry will release its half-year economic forecasts. The International Monetary Fund forecast last month that Europe's largest economy will expand 1.6% this year, but the country's Chambers of Commerce and Industry (DIHK) is more optimistic. In a report released last week, the DIHK revised its 2014 growth estimate up to 2% from 1.7% previously.
Wednesday will also bring the Bank of England's latest inflation report. Analysts will be on the look-out for an accompanying statement on the central bank's forward guidance, a pledge issued in August of last year not to hike rates until Britain's unemployment rate falls to 7% or below.
At the time, officials predicted this threshold would not be hit until 2016, but jobless figures released last month showed that unemployment fell to 7.1% in the three months ended in November. As a result, Governor Mark Carney is under pressure to clarify the bank's intentions.
Since he did not do so at last week's policy meeting, many believe he will use the occasion of the inflation report's release to do so. Economists suspect that he will tweak the bank's forward guidance to say that future interest rates will be linked to factors other than the jobless rate.
On Friday, attention will shift back across the English Channel for fourth quarter gross domestic product data for the eurozone. After an extended recession, the common currency bloc finally returned to growth in 2013. Expectations are that the region's economy expanded by 0.2% in the fourth quarter of last year. The biggest four economies in the eurozone will probably post growth for the first time in the fourth quarter since 2011.
China – the world's number two economy – will release money supply and new yuan lending figures on Monday. Banks' new lending came in weaker than expected in December, while broad money supply also grew at a slower rate. Consensus is that new lending picked up to one-trillion yuan in January from 482.5-billion in December. Money supply growth likely dropped further, to 13.2% year on year growth from 13.6% previously.
On Wednesday, China will release trade figures. Economists expect the country's trade surplus to have narrowed to $24.1-billion in January from $25.6-billion in December, which was a 24.3% fall from a year earlier.
On Friday, China will report last month's consumer and producer and inflation readings. Markets expect the annual consumer inflation rate to have slowed to 2.4% from 2.5% in December. Prices at the factory gate likely fell 1.4%, the same rate of decline recorded in December.
Elsewhere in the region, India will release January's CPI readings on Wednesday and wholesale price index (WPI) on Friday. Under recently installed Governor Raghuram Rajan, the Reserve Bank of India has shifted its focus to managing policy based on the CPI rather than the WPI. As a result, both sets of figures will be closely scrutinised.
Beyond these data releases, the central banks of Korea and Indonesia will each hold policy meetings on Thursday. Both institutions are expected to keep benchmark rates on hold at 2.5% and 7.5%, respectively.