Economic week ahead: Funky
On the data front, a series of purchasing managers' index releases from across the world will provide insights into the months ahead. Here is your guide.
As the United States' trading week begins, economists and investors will focus on three significant data releases, the Institute for Supply Management (ISM)'s manufacturing purchasing managers' index (PMI), October's construction spending figures and November's vehicle sales data.
Analysts surveyed by Dow Jones expect the ISM's manufacturing PMI to slip, but remain above the 50-mark separating expansion from contraction. Consensus is for a reading of 51.o, down from 51.7 in October. Markets expect construction spending figures to show a 0.5% rise. And vehicles sales likely totalled 15.2-million units in November, one million more than in October.
Midweek, attention will shift to ADP's private-sector jobs report, third quarter productivity and costs, factory orders and ISM's non-manufacturing PMI.
Analysts expect ADP's November jobs report to show that the world's largest economy added 136 000 positions in November, down from 158 000 in October.
Third quarter productivity is forecast to improve to 2.8%, quarter on quarter, up from an initial estimate of 1.9%. Unit labour costs are expected to show a 1.0% decrease. October's factory orders are thought to have slipped 0.1%, following a 4.8% rise in September. ISM's November non-manufacturing PMI is expected to slip to 53.5 from 54.2 in October.
On Thursday, weekly jobless claims will probably drop to 383 000 from 393 000 last week. And on Friday, November's nonfarm payrolls data is forecast to show a 98 000 rise for November, down markedly from October's 171 000. A significant portion of the fall-off is probably attributable to Hurricane Sandy.
Monday is PMI day in Europe. Markets will be watching for manufacturing reads from across the continent. The results are likely to point to continued woes for the continent.
Analysts expect the euro zone's gauge to remain firmly in contraction territory at a reading of 46.2. Individual readings for Germany, France, the United Kingdom, Italy, Spain, Sweden, Hungary, Norway, Poland, the Czech Republic, Switzerland and Greece are also expected to remain below the 50-mark separating expansion from contraction.
Service sector PMIs – which will follow on Wednesday – are likely to be just as ugly. Markets expect the euro zone's services PMI to remain stuck at 45.7 and the currency bloc's composite PMI to remain 45.8, signalling a tenth consecutive month of contraction for both the continent's manufacturing and services sectors.
Wednesday will also see an auction of bonds maturing in 2015, 2019 and 2022 in Spain and a sale of two-year notes in Germany. France will auction bonds maturing in 2018, 2019 and 2017 on Thursday, the same day the European Central Bank (ECB) and Bank of England (BOE) announce their final monetary policy decisions of the year.
Markets expect the ECB to lower its growth forecasts for Europe, but leave interest rates on hold at 0.75%, a record low. No new announcements related to Europe's debt situation are expected either.
Policymakers at the Bank of England are also expected to sit on their hands. A recent Reuters poll showed economists united in their prediction that policymakers will leave rates on hold at their record low of 0.5% for the foreseeable future as concerns over inflation outweigh concerns over lacklustre economic growth.
Australia will feature prominently in Asian business headlines this week. On Tuesday, the Reserve Bank of Australia (RBA) will hold its last policy meeting of the year.
Money markets are predicting an 83.0% chance that officials will cut the 3.25% overnight rate – by 25-basis points – on Wednesday after data released last week showed that investment intentions in the mining sector – on which the country's economy is heavily dependent – have been revised sharply downwards for next year. Policymakers previously cut the bank's benchmark rate by 50-basis points in May and 25-basis points in June.
The highlight on Australia's full economic calendar this week is Wednesday's gross domestic product (GDP) data. Economists surveyed by the Australian Associated Press expect the figures to show that the country's economy grew by 0.6% in the third quarter and by 3.1% in the year to September, a sharp slowdown from the 3.7% growth recorded through the end of the second quarter. The RBA recently lowered its growth projections for Australia to 3.0% in 2013.
Australia's full calendar for the week includes, October's retail sales figures, business indicator figures, PMI and home price data on Monday. Third quarter current account balance data, October's building approvals figures and services PMI figures will follow on Tuesday.
On Thursday, November's labour force data is expected to show that the country added 10 000 jobs in November and that the unemployment rate remained unchanged at between 5.4% and 5.5%. October's trade balance data will close out the week on Friday.
On Monday, Brazil – the region's largest economy – will release trade figures and PMI readings and Mexico's Instituto Mexicano de Ejecutivos de Finanzas (IMEF) will release its manufacturing and non-manufacturing indices.
Consensus is that a $396-billion increase in imports last month, coupled with a $716-million decrease in exports, will reduce Brazil's trade surplus to $500-million in November from $1.66-billion in October.
Analysts at 4CAST expect Brazil's PMI to rise to 50.5 in November from 50.2 in October, for the IMEF's manufacturing index to tick-up to 52.5 from 51.8 and for the institute's non-manufacturing index to edge up to 54.8 in November from 54.3 in October.
On Tuesday, Brazil will release industrial production numbers and Mexico will release consumer confidence data. Markets expect Brazil's figures to show that industrial output rose by 1.2%, on a seasonally adjusted month on month basis, in October following a surprise 1.0% decline in September. Mexico's consumer confidence index is forecast to register a slight decline.
Elsewhere in the region, Monday will bring revenue figures from Argentina and Colombia and vehicle sales figures from Venezuela. Producer price inflation readings from Colombia and consumer price index (CPI) figures from Venezuela will follow on Tuesday.
On Wednesday, Chile will release its economic activity index and vehicle sales figures, as will Argentina. On Thursday, Columbia will release CPI readings and Peru's central bank is expected to leave the country's reference rate on hold at 4.25%. And, on Friday, Chile will report CPI, copper export and trade balance numbers.
Africa's economic week will begin with PMI readings from South Africa. The country's PMI fell to 47.1 in October – its lowest level since July of last year – and the outlook for South Africa's second largest sector remains negative.
Elsewhere on the continent, officials at the Bank of Uganda and Central Bank of Egypt will announce their latest rates decisions on Tuesday and Thursday, respectively.
The Uganda Bureau of Statistics reported on Friday that the country's headline inflation rate rose – for the first time in eight months – from 4.5% in October to 4.9% in November. Core inflation, however, fell to 3.8% from 4.0%. With core inflation comfortably below the bank's 5.0% target, analysts expect policymakers to leave the central bank rate on hold at 12.5%.
Economists expect the Central Bank of Egypt (CBE) to leave its overnight lending rate on hold at 10.25% for seventh consecutive time this year at this week's meeting. Egypt's foreign reserves are at extremely low levels – the CBE will report November's figures on Thursday – and a $4.8-billion loan package from the International Monetary Fund (IMF) has not yet been approved by the fund's executive board. Until the deal is finalised and capital begins flowing back into the country, the CBE is unlikely to loosen its policy stance.
Finally, on Friday, Ghana will hold its first round presidential election. President John Mahama of the National Democratic Congress will face the New Patriotic Party's Nana Akufo Addo in what analysts expect to be an extremely close election.
Matt Quigley writes a weekly economic preview for the Mail & Guardian Online. You can follow him on Twitter at @mattquigley.