In the euro area, ZEW and IFO confidence indices, the BNB survey in Belgium, and the second estimate of the composite PMI should confirm the stabilisation of the cycle on still depressed levels, albeit slightly better than at the end of 2012. …..
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Broken down German GDP data will prove that the stronger than expected contraction in 4Q 2012 was due to slower exports, and probably to weaker domestic demand. French inflation is estimated to come in stable at 1.3% y/y at the national level, whereas a one-tenth rise in the harmonised rate to 1.6% y/y cannot be ruled out.
Busy calendar of data releases in the United States next week. The CPI and PPI should show very modest increases in January. Housing starts are expected to correct in January, after rising strongly in December, while confirming the uptrend observed since mid-2011; existing home sales should also drop modestly, without changing the positive outlook of the sector. The minutes of the January FOMC meeting should signal that purchases are likely to continue for the better part of the year.
Monday, 18 February
United States
Markets closed for Presidents’ Day.
Tuesday, 19 February
Euro area
Germany. The ZEW index may take a breather in February, after recovering a standard deviation in the two previous months. The expectations index could stabilise at 30.5 from 31.5. The current situation index may recover further ground, to 9 from a previous reading of 7.1, still below last October’s level.
United States
The NAHB builders’ confidence index should rise to 48 in February, after pausing at 47 in January, signalling a resumption of the uptrend in new home sales following a few months of uncertainty.
Wednesday, 20 February
Euro area
Germany. Producer prices could be up by only 0.1% m/m, as a result of lower energy prices in euros, which should offset positive seasonal effects. Year-on-year, inflation is expected to slow to 1.2% y/y, from 1.5% y/y the previous month.
Germany. Inflation should be confirmed at 1.9% y/y, from a previous rate of 2.0% y/y both in terms of the harmonised index and of the national index. In the month, consumer prices dropped by 0.7% m/m in harmonised terms, and by 0.5% m/m at the national level, due to negative seasonal effects and to moderating energy prices in euros. In January, the national index was indexed at 100 in 2008 and should be made public with the second estimate.
France. Inflation is forecast to stay put at 1.3% y/y at the national level, but could rise back by one-tenth to 1.6% y/y in terms of the harmonised rate. Consumer prices are expected to be down by 0.3% m/m. Energy prices are estimated to have increased in January, contributing positively to the CPI trend, based on the survey of petrol prices.
France. The INSEE index of confidence among manufacturing companies is forecast at 88, up from 86 in January. The previous month it had slowed sharply mostly on the back of views on current production, with a downward revision of expectations for the following three months, given the drop in foreign orders. In light of signals of a recovery in world trade, and of improved confidence among German companies (in the past three months), we expect confidence in France to return to at least the same levels seen last November, in any case lower than in the first seven months of 2012.
United States
In January, housing starts are estimated to have decreased to 940k from 954k in December, when the figure surged, especially in the volatile multi-family home segment. Building permits should be up to 920k from 909k in December. The trend in residential construction is still clearly up, and should bring an acceleration in the pace of growth compared to 2012, in line with the indications provided by the builders’ confidence survey, currently consistent with housing starts close to 1.4 million ann. The reduction in the stock of unsold existing homes, and low mortgage rates, support forecasts for a pick-up in housings starts in the months ahead.
The January PPI is expected to show a 0.5% m/m rise, after three consecutive monthly declines in the autumn of 2012. The increase is largely due to the oil component, but also to food prices. The core index should post a limited increase of 0.2% m/m, only slightly higher than the +0.1% m/m December rate. The price components of the manufacturing sector surveys point to a modest reacceleration in inflation upstream of the production process in the months ahead. The depreciation of the dollar, and the increase in the price of oil, will fuel upside pressures on production prices.
The Fed will publish the minutes of the January FOMC meeting. The minutes should shed light on the debate opened in December on the expected duration of the purchase programme, and on potential changes in communication, aimed at improving transparency on the FOMC’s reaction capacity.
Thursday, 21 February
Euro area
The composite PMI should confirm a recovery in January, to 48.6 from a previous reading of 47.2. The manufacturing PMI rose last month to 47.9 from 46.1, and we cannot rule out a slight decline in the wake of the French index. We estimate the services index to be confirmed at 48.6, from 47.8 the previous month. While on the recovery compared to the autumn, the PMI indices remain compatible with a slight contraction in euro area GDP also at the beginning of 2013, after the drop recorded at the end of 2012.
United States
The January CPI is expected to be up by 0.1% m/m, with the core index on the rise by 0.2% m/m. January should bring a sizeable drop in the price of gasoline, due to the seasonal correction; this should result in the fourth consecutive decline in the energy component. As regards the core index, a modest reacceleration in the shelter component is expected, to +0.2% m/m (from 0.1% m/m in December), due to higher hotel rates. In year-on-year terms, the core index is estimated to rise by 1.8% y/y, marginally less than the 1.9% y/y readings of November and December.
The Philadelphia Fed index in February is forecast to rise to 3.5 from -5.8 in January. The January survey was negative, both in terms of the overall index and of the breakdown, with the orders component in particular returning into negative territory. The manufacturing sector ISM marked two consecutive increases and levelled off at 53.1 in January, improving significantly from 49.9 in November. We expect the regional surveys to recover, after underperforming the national index for several months, confirming the expansion of activity in the sector, and its acceleration in the course of the year.
Friday, 22 February
Euro area
Germany. The IFO index is forecast to prove stable in February at 104.2, after recovering in the two previous months. We expect the current situation index to come in stable at 108.2, after rising back over the long-term average (101.2) in the past two months, although a slight retracement is possible, given the indications of a sharp drop in foreign orders highlighted by the Belgian survey last month. The expectations component could rise to 100.6 from 100.5, in the wake of positive signals from global demand; the index would in any case stay broadly in line with the long-term average (100.5). The recovery of the German economy will be gradual, and lacking January data on industrial output and/or exports, it is hard to tell whether GDP will be able to return into neutral territory after the weak end to 2012.
Germany. The detailed estimate of 4Q 2012 GDP should confirm a 0.6% q/q decline, with growth slowing by -0.4% y/y vs. a previous rate of 0.9% y/y. The slowdown of the German economy is probably due to a drop in exports, which we estimate to have left the contribution of foreign trade at -0.3%. Domestic demand should also be down by 0.1% q/q due to a contraction in spending on machinery (-2.1% q/q) and a slowdown in consumer spending (flat in the quarter). The 0.6% q/q contraction at the end of 2012 is still compatible with an average annual growth rate of +0.7%, but the weak end of the year has left our estimate for 2013 at +0.4%, assuming GDP resumes growing by 0.1% q/q in 1Q 2013, as suggested by monthly
surveys.
Belgium. After the January decline, we expect the BNB index to recover this month, to -11.8, still well below its long-term average. More in detail, we expect sentiment to brighten in manufacturing, after last month’s sharp contraction in foreign orders.
Italy. After collapsing in January, consumer confidence could rebound marginally in February, to 85 in our estimate, not far from the record-low hit last month (84.6). Depressed assessments on the family financial situation and unemployment expectations will continue to weigh on households’ morale.
United States
Existing home sales should be down in January to 4.90 million from 4.94 in December, in light of poor pending home sales figures in December. A correction in January would not alter the uptrend in sales, which we expect to continue in the quarters ahead.
Appendix
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