The key indicators next week will be the flash November PMI readings for the Eurozone and second estimates of third quarter GDP figures for the United States and the United Kingdom. But CPI and household spending data from Japan will also be closely watched.
The flash November PMI data for the Eurozone will start the week on Monday. The manufacturing and services PMI are released for Germany, France and the euro area as a whole. Manufacturing PMI in the Eurozone is forecast to ease slightly to 52.2 from 52.3 in November, while the services PMI is also expected to weaken slightly to 54.0 from 54.1. The survey showed a sharp rebound in activity across the Eurozone at the start of 2015 but has since levelled off. The weakening recovery is one of the factors the ECB will consider when it meets in two weeks’ time to decide whether to expand its stimulus program. Also important will be the German IFO survey on Tuesday. The IFO business climate index is forecast to fall to 108.0 in November from 108.2 previously and IFO expectations index is not expected to do any better and decline to 103.6.
It will be a busy week for US data next week with plenty of indicators to keep the Fed busy ahead of its December meeting. Starting off on Monday is the manufacturing PMI and existing home sales, followed by the second estimate of third quarter GDP data on Tuesday. US growth is expected to be revised up to an annualized rate of 2.0% from 1.5% in the initial estimate. A flurry of data is due on Wednesday ahead of the Thanksgiving holiday on Thursday when US markets will be closed. Durable goods orders on Wednesday is forecast to show a 1.3% m/m gain for October after dropping by 1.2% in September. Released on the same day are the personal income and spending numbers, as well as the PCE price index. Personal income growth is forecast to accelerate to 0.4% m/m and personal consumption is expected to continue its steady rise over the year to grow by 0.3% m/m, adding further weight to the argument that the US economy can handle a rate increase. There will be more housing data in the form of new home sales on Wednesday, as well as the flash services PMI for November.
The Bank of Japan will publish the minutes from its November policy meeting on Wednesday. But more significantly for future BoJ policy will be Thursday’s batch of data for Japan. Household spending data for October is expected to show a 1.1% m/m gain on Thursday after dropping by -0.4% the prior month. Household spending has been weaker than what the Bank of Japan had anticipated during the course of the year, undermining its efforts to stimulate domestic demand. The unemployment rate is forecast to hold steady at 3.4% in October and lastly, the latest CPI numbers are likely to attract the most attention. October CPI, excluding fresh foods, is expected to stay negative at -0.1%, while the preliminary core CPI estimate for Tokyo is expected to edge up slightly to -0.1% in November from October’s -0.2%.
In Britain, the autumn budget statement is likely to dominate UK headlines on Wednesday. The Chancellor George Osbourne is expected to announce changes to tax credits and pensions, as well as outline the details of the spending review. On Thursday, the second estimate of third quarter GDP is published. No revision is expected to the UK’s quarterly GDP growth but more detailed analysis will be available including exports and business investment in the third quarter.
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