/ 29 October 2012

Economic week ahead: Beginning with Frankenstorm

Hurricane Sandy and Friday's closely followed monthly employment situation report will dominate the beginning and end of America's economic week.
Hurricane Sandy and Friday's closely followed monthly employment situation report will dominate the beginning and end of America's economic week.

In between, a series of bond auctions in Europe, central bank meetings in Japan and India, and multiple African and South American data releases will keep things rolling. Here is your guide.

North America
Hurricane Sandy – the massive storm hitting America's east coast on Monday – and Friday's closely followed monthly employment situation report – the last before next's week neck-and-neck presidential election – will dominate the beginning and end of America's economic week, but other notable releases will occur in between.

On Monday, markets will focus on the government's personal income and outlays report for September. Economists expect incomes to have risen 0.4% in September, up from 0.1% in August. Spending is expected to have risen 0.6%, up from 0.5% in August.

On Tuesday, the conference board's consumer confidence index is forecast to rise to 74 from 70.3 in September. The S&P/Case-Shiller home price index's August reading is expected to improve by 2.1%.

On Wednesday, the US government's employment cost index is expected to show a flat reading of 0.5% for the third quarter and the Chicago purchasing managers' index (PMI) is predicted to cross the 50-mark separating expansion from contraction, likely up to a reading 51 in October from 49.7 in September.

On Thursday, a full day, economists expect weekly jobless benefit claims totals to remain relatively flat; third quarter productive statistics to show a 1.3% rise, after rising 2.2% in the second; and third quarter labour costs to rise 1.2%, following a 1.5% rise in the second quarter.

Finally, Friday's employment situation report is expected to show that America added 120 000 non-farm jobs in October, up from 114 000 in September. The unemployment rate is forecast to hold at 7.8%.

Europe's economic week will kick off on Monday with an Italian auction of €8-billion of six-month treasury bills and a meeting between Spain's Prime Minister Mariano Rajoy and Italian Premier Mario Monti in Madrid.

On Tuesday, Germany will report October's unemployment data, Spain will release third quarter gross domestic product (GDP) data and Italy will hold a bond auction of up to €4-billion in five-year and €3-billion in 10-year notes. Markets expect Germany – the continent's largest economy – to report a slight uptick in unemployment to 6.9% and for Spain's GDP to have contracted 1.7% in the third quarter from a 1.3% drop in the second.

On Wednesday, Germany will sell €2-billion in bonds maturing in 2044. France will auction between €6.5-billion and €7.5-billion of six, 10 and 23-year bonds. Portugal's Parliament will vote on the country's 2013 budget.

Portugal's draft budget proposes the steepest tax rises in Portugal's democratic history, spending cuts totalling €2.7-billion and retrenchment of 2% of public sector employees. Opposition – both popular and political – to the budget has prompted speculation that the country's centre-right coalition could collapse under the strain of meeting the terms of Portugal's €78-billion bailout from the European Union and International Monetary Fund.

On Thursday, markets will be watching for purchasing managers' index (PMI) results for Russia, Ireland, Sweden, Norway, Turkey, the Czech Republic, Switzerland, Greece and the United Kingdom on Thursday. Results for the eurozone as a whole and its largest economies – Germany, France, Italy and Spain – will follow on Friday.

A data deluge and central bank meeting will keep Japan – the world's third largest economy – at the top of Asian investors' minds this week. The country's ministry of economy, trade and industry released September's retail sales figures on Sunday. Employment, household spending, industrial output and housing starts will follow over the coming days.

On Tuesday, economists expect employment data to show that Japan's jobless rate remained unchanged at 4.2% and that household spending rose for an eighth straight month in September. Industrial output is expected to show a 3.4% month on month fall, its third consecutive decline.

On Wednesday, analysts expect September's housing starts to show a 16.7% year on year rise – the first year on year gain in four months – and for the Bank of Japan to further expand the bank's asset purchase programme. Markets expect an expansion of ¥10-trillion, bringing the total size of the bank's programme to ¥90-trillion.

Beyond Japan, a central bank decision in India, a purchasing managers' index (PMI) report in China and the release of South Korea's October trade data will keep those three economies in the headlines this week.

On Tuesday, the Reserve Bank of India will probably leave the country's benchmark repurchase rate on hold at 8%, but cut the bank's 4.5% cash reserve ratio by 25 basis points.

On Thursday, China's official PMI is forecast to rise above the 50-mark, signalling expansion, and South Korea's trade balance is expected to have swelled from $3.1-billion in September to $3.4-billion in October.

Latin America
Brazil – the region's largest economy – is likely to dominate Latin America's economic news this week.

On Tuesday, Brazil's Foundation Getulio Vargas (FGV) will release its latest inflation gauge. Markets expect the index to show a 0.14% monthly rise in October, down from 0.97% in September.

Another inflation gauge – the manufacturing producer price index (PPI) – will follow on Wednesday. Producer prices rose 0.53% in August and are expected to have risen for the seventh consecutive month in September, possibly by 0.60%.

On Thursday, October's manufacturing PMI, industrial production and trade statistics will dominate the news. The PMI is expected to remain just below the 50 mark separating expansion from contraction. Industrial output is forecast to fall 0.5% from August to September, following 1.5% growth in the previous month. And, finally, markets expect government figures to show that Brazil's trade surplus narrowed for the seventh straight month to $1.825-billion in October from $2.557-billion in September.

Elsewhere in the region, Argentina will report budget balance data on Monday. Copper production, manufacturing index and retail sales readings will follow from Chile on Tuesday. On Wednesday, Chile and Colombia will report employment figures and Argentina will release construction activity data. On Thursday, the Mexican Institute of Finance Executives (IMEF) will release its latest manufacturing and non-manufacturing indices.

Inflation data will also feature prominently in the latter part of the week. Peru will report on consumer and wholesale price inflation on Thursday and Colombia will report producer price index (PPI) data on Friday.

South Africa – the continent's largest economy – will release last month's M3 money supply and private sector credit extension data on Monday. Consensus is for an 8% year on year rise in money supply and 8.3% growth in credit.

On Wednesday, trade figures from SARS are expected to show that the country's trade gap narrowed from R12.2-billion in August to R8.2-billion in September. Christie Viljoen, a senior economist at NKC Independent Economists, said that the reduced deficit is "largely due to the significant jump seen in August".

On Thursday, the Bureau for Economic Research will release October's PMI readings. The PMI declined during August and September and, despite forecasts for a slight improvement, is expected to remain in negative territory this month.

Closing out the week, the National Association of Automobile Manufacturers of South Africa will report October's vehicle sales. The annual pace of total sales growth slowed to 1.4% in September – the lowest level since January 2010 – largely as a result of the high base established in September of last year.

Elsewhere on the continent, Nigeria – the continent's second largest economy – will release foreign trade data, Kenya will issue overseas remittances numbers and Namibia will report its foreign reserves. Morocco, Namibia and Mauritius will report their latest money supplies, Kenya and Uganda will report on inflation and Morocco will report its unemployment rate.

In addition to these data releases, the central banks of Ghana, Zambia and Uganda will announce their latest rates decisions on Monday, Wednesday and Friday, respectively.

  • Matt Quigley writes a weekly economic preview for the Mail & Guardian Online. You can follow him on Twitter at @mattquigley.