Economic week ahead: PMI reports, central banks
America’s monthly jobs report and policy decisions from the European Central Bank and Bank of England are the big events on this week’s global calendar. Here is your guide.
South Africa’s economic week will begin on Monday with the Bureau for Economic Research (BER)’s November manufacturing purchasing managers’ index (PMI) report, the National Association of Automobile Manufacturers of Southern Africa (Naamsa)’s November vehicle sales totals, and October’s detailed trade tallies.
Analysts will be watching the PMI numbers particularly closely. Manufacturing activity expanded at the fastest pace in 22 months in October. News that the positive trend continued last month would be welcome news as the country continues to recover from devastating work stoppages earlier this year.
The week will close on Friday with the South African Reserve Bank’s November reserves report, the South African Chamber of Commerce and Industry (Sacci)’s November business confidence index, and housing market reports from Absa and Standard Bank. Elsewhere on the continent, policymakers at the Bank of Botswana will announce their final rates decision of the year on Wednesday.
The central bank’s monetary policy committee left their benchmark rate on hold at 7.5% for the 10th consecutive month in September and are widely expected to do the same this week.
Botswana’s latest inflation data showed that the country’s inflation rate slowed to 4.3% growth from a year earlier in October from 4.5% in September. Botswana’ inflation rate has remained within the central bank’s 3.0% to 6.0% target band since June 2013 and has remained below 5.0%, year-on-year, since October 2013.
On Monday, the Institute for Supply Management (ISM)’s latest survey data may show that November’s manufacturing index slid to 57.8 from 59.0 in October. Any reading above the 50-mark signals continued expansion for the sector.
On Tuesday, economists and investors will turn their attention to motor vehicle sales and construction spending reports. Total vehicle sales probably remained flat at 16.5-million units in November. Construction spending may have risen 0.5% from September to October after unexpectedly falling 0.4% over the preceding monthly period.
On Wednesday, ADP’s November employment report may show a private payroll employment gain of 225 000 in November, down from 230 000 in October. ADP’s report is based on records representing approximately 400 000 business clients.
On Thursday, government’s weekly jobless claims figures may show that initial claims for unemployment benefits fell to 295 000 in the week ended November 29 from 313 000 in the week prior.
Closing out the week on a busy Friday, November’s employment situation report, October’s trade data, and October’s factory orders will take centre stage. Consensus is that payrolls rose 230 000 last month as the country’s unemployment rate remained unchanged at 5.8%. America’s trade gap likely narrowed to $41.0-billion in October from $43.0-billion in September. Factory orders may have fallen 0.3% in October.
A series of manufacturing purchasing managers’ index (PMI) reports will kick-off Europe’s economic week on Monday. Markets expect releases covering the euro zone as a whole and its two largest component economies – Germany and France – to confirm that manufacturing activity in the region remained flat in November.
Service sector PMIs will follow on Wednesday along with Europe’s latest growth figures. Consensus is that Eurostat’s second estimate of euro zone gross domestic product (GDP) will confirm that the region expanded 0.2%, quarter-on-quarter, in the three-months to September.
Also on Wednesday, George Osborne – the UK’s Chancellor of the Exchequer – will deliver his autumn statement to Parliament. His remarks will include updated growth forecasts along with new spending and taxation proposals.
On Thursday, the Bank of England (BOE) and European Central Bank (ECB) will announce rates decisions and release revised economic forecasts. Analysts widely expect the BOE’s monetary policy committee to leave its benchmark interest rate on hold at 0.5%, a record low. ECB policymakers are also likely to leave rates on hold and refrain from announcing any new stimulus measures at their final meeting of the year.
Closing out the week on Friday, German factory orders data may show that orders rose a mere 0.5% from September to October, down from a 0.8% monthly rise previously.
According to data reported by China’s National Bureau of Statistics (NBS) on Monday, China’s official manufacturing PMI slipped to an eight-month low of 50.3 in November. The NBS’s survey sample is biased toward larger, state-owned firms.
A preliminary manufacturing PMI reading from HSBC/Markit, whose sample contains less of a bias, released last week showed that output contracted for the first time in six-months in November.
Taken together, the two surveys are likely to stoke speculation that the world’s number two economy is slowing and will require additional stimulus measures.
On Tuesday, policymakers at the Reserve Bank of India (RBI) and Reserve Bank of Australia (RBA) will hold rate-setting meetings. Officials in India will almost certainly leave the bank’s cash reserve ratio, repo rate and reverse repo rate at current levels.
The RBA is widely expected to leave Australia’s benchmark overnight rate unchanged at a record low 2.5% for the 16th consecutive month.
On Wednesday, Australia and South Korea will report third quarter growth figures and HSBC/Markit will release their China services PMI report. Australia’s growth probably recorded 0.7% quarterly growth in the three-months to September. South Korea’s final figures are likely to indicated 0.9% quarter-on-quarter growth over the same period.
Asia’s economic week will draw to a close on Friday with trade and foreign reserve figures from Malaysia and inflation data from Taiwan.