Economic week ahead: Welcome to 2014
The first full week of 2014 will be a busy one for markets. The latest manufacturing numbers from South Africa, US employment figures, central bank decisions in Europe and a slew of data from China will keep economist and investors focussed as another year gets into full swing. Here is your guide.
The first full week of 2014 will bring a slew of data releases from South Africa.
The Bureau for Economic Research at the University of Stellenbosch will report December's manufacturing purchasing index (PMI), the South African Revenue Service will report detailed trade figures for October and FNB and Standard Bank will each report December housing price indices on Monday.
The South African Reserve Bank's December reserves report will follow on Tuesday along with last month's vehicle sales tallies from the National Association of Automobile Manufacturers of South Africa and November electricity data from Statistics South Africa (Stats SA).
On Thursday, November's manufacturing figures will come into focus. Analysts at 4CAST expect the Stats SA figures to show that output rose 2.4% from a year earlier in November, up from a 1.5% year on year rise in October.
South Africa's consumers will take centre stage on Friday. BankservAfrica's will release its third quarter disposable salaries index – a monitor of how much cash salaried workers have at their disposal – and the National Consumer Regulator will release its third quarter consumer credit market report.
Elsewhere on the continent this week, Egypt will report December's gross reserves and Angola will release November's net reserves figures. Uganda will report November's money supply figures, Senegal will report last month's consumer price index and Kenya will update on overseas remittances.
Government factory orders data and the Institute for Supply Management's (ISM) latest non-manufacturing index readings will get America's week rolling on Monday. Markets expect factory orders data to show that orders rose 1.6% in November after falling 0.9% in October. The ISM's non-manufacturing index is expected to move further into expansion territory, likely rising to a reading of 54.8 in December from 53.9 in November.
On Tuesday, attention will shift to November's international trade figures. Consensus is that the US trade gap narrowed to $39.9-billion from $40.6-billion in October and $43.0-billion in September on the back of stronger export performance.
On Wednesday, minutes from the Federal Reserve's most recent meeting will hog the spotlight. Policymakers decided to reduce the size of the central bank's monthly asset purchase programme by $10-billion per month at their December meeting. Analysts will be scrutinising the meeting minutes for clues about the timing and size of future stimulus cuts.
On Thursday, markets expect weekly jobless claims figures for the week ended January 4 dropped to 331 000 from 339 000 in the prior week. Both weeks' data are cloudy by holiday volatility, however, so the reaction to this week's figure will probably be muted.
Finally, on Friday, the week's big report will be released. Analysts are expecting America's latest monthly employment situation report to show that US employers added 197 000 jobs in December, down from 203 000 in November. The country's unemployment rate is expected to remain steady at a five-year low of 7%.
Europe's two most powerful central banks – the European Central Bank (ECB) and Bank of England (BOE) – will announce their latest policy decisions on Thursday. Both institutions are widely expected to leave rates unchanged, but economists and investors will be on the look-out for any hints of future action.
Data released last week showed that lending to business in the eurozone contracted at its fastest pace ever in November, adding to calls for further stimulatory action by the ECB. This action, which many expect to come during the early months of 2014, could come in the form of extremely low rate interest rate loans to eurozone banks aimed at boosting overall lending.
In the UK, officials are confronting a different dilemma. Policymakers have pledged to keep rates at current levels until the country's unemployment rate falls to 7%, something they expected to happen in 2016. But unemployment has fallen sharply over recent months and speculation is mounting that officials may soon revise their jobless rate target. Although few expect the BOE to issue revised forward guidance this week, many believe a revision to a 6.5% unemployment rate threshold is on the cards, possibly as early as next month.
On the economic data front, the eurozone will provide updated inflation figures on Tuesday and unemployment and retail sales figures on Wednesday. Other highlights include German industrial production data on Thursday and output data from France and the UK on Friday.
China will feature prominently in Asia's economic news this week. Monday will see the release of HSBC's December services PMI.
On Wednesday, China's National Bureau of Statistics will release last month's trade data. Markets expect the data to show that the pace of China's export growth slowed to 5.2% from a year earlier in December from 12.7% growth in November. Exports have recently served as a drag on China's economy as a stronger local currency and rising labour costs have diminished the attractiveness of the country's products to overseas buyers.
On Thursday, China will release December's consumer and producer price indices. China's Bank of Communications expects December's consumer price index to register a 2.6% year-on-year rise, down from 3% in November. Consensus is that the country's producer price index – a measure of price rises at the factory gate – fell 1.3% from a year earlier in December.
Finally, on Friday, the People's Bank of China will report last month's new yuan lending and money supply figures. Markets expect the data to show that the value of new loans fell to 585-billion yuan in December from 625-billion yuan in November. M2 money supply growth likely slowed to 13.9%, year on year, in December from 14.2% in November.
Elsewhere in the region, South Korea's central bank will announce its latest rates decision on Thursday. Officials are widely expected to keep rates unchanged for the eighth consecutive month.