Last week was very hectic with Parliamentary elections in the United Kingdom, first-ever interest rate decision by ECB President Lagarde, the last interest rate decision of the year by the Federal Reserve in the United States, and another chapter in the trade tariff drama between the U.S. and China.
In the upcoming week, the markets will see reactions to these events. Some other key economic data releases are also likely to move the markets next week. Here is an outlook on some of the major economic data scheduled for release by countries around the world:
#1: France Flash Services PMI (12/16/2019 Monday 08:15 GMT)
In France, the Services PMI reported by IHS Markit came in below the preliminary estimate and stood at the 52.2 level in November. Analysts had expected the index to come in at 52.9. In October, the Services PMI came in at 52.9 as per final figures. The latest reading of the index pointed to a slowdown in the growth of the services sector. Growth in new orders slowed because of the domestic market conditions. Export sales grew at a faster pace and employment creation rate rose at the fastest rate in as many as four months. Work backlogs rose for the seventh month in a row. Input cost inflation slowed down, but output prices increased marginally. Further, sentiment remained positive and hit the highest level ever since April, driven by stronger demand expectations.
Forecast for December 2019 – 52.1
#2: Germany Flash Manufacturing PMI (12/16/2019 Monday 08:30 GMT)
In Germany, the Manufacturing PMI reported by IHS Markit/BME was revised upward to the 44.1 level in November from the preliminary estimate of 43.8. In October, the final reading of the index stood at 42.1. The reading for November was the highest ever since June. However, it is still very much within the contraction territory. Output dropped for the tenth month in a row, the longest decline sequence ever since 2008-09. Export sales and new orders also fell, but at a slower rate since January. Additionally, employment and buying levels across the manufacturing sector declined at a slower rate. Business sentiment remained in the positive territory for the first time ever since June. Input costs dropped by the most ever since March 2016 amid reductions in chemical, metal, and plastic prices. The average factory gate charges declined for the fifth month because of strong competition for new work.
Forecast for December 2019 – 44.6
#3: Germany Flash Services PMI (12/16/2019 Monday 08:30 GMT)
In Germany, the Services PMI reported by IHS Markit edged up to the 51.7 level in November from the preliminary reading of 51.3 and the final level of 51.6 in the previous month. The reading for the month pointed to a strong improvement in activities in the services sector ever since August. The rate of employment creation picked up a little bit and, by historical standards, it was solid. However, new orders declined for the third month in a row and outstanding business dropped significantly for the fourth straight month. Operating costs increased sharply because of upward wage increase pressures. Output price inflation edged up above the average level. Further, business confidence as regards activity in the coming year was back in the positive territory after remaining negative for the very first time in as many as seven years in the month of October.
#4: United Kingdom Flash Manufacturing PMI (12/16/2019 Monday 09:30 GMT)
In the United Kingdom, the Manufacturing PMI reported by IHS Markit/CIPS was revised upward to the 48.9 level in November from the preliminary estimate of 48.3. In October, the final reading of the index came in at 49.6. Output contracted at a faster rate and new orders dropped for the seventh straight month with new export orders falling at one of the highest rates in the last seven years. The contraction in output was attributed to the delay in Brexit and continuing uncertainty related to factors such as economic, political, and global trade situations. In addition, jobs declined the most ever since September 2012 because of cost reduction efforts, efficiency aspects, Brexit uncertainty, natural wastage, redundancies, and staff restructuring. Finished goods inventories dropped at the highest rate in more than two-and-a-half years. Input buying volumes dropped to one of the largest extents ever since early-2013. Input costs fell for the first time ever since March 2016 because of exchange rate effects and lower prices of commodities around the globe.
Forecast for December 2019 – 49.1
#5: United Kingdom Flash Services PMI (12/16/2019 Monday 09:30 GMT)
In the United Kingdom, the Services PMI was revised upward to the 49.3 level in November from the preliminary reading of 48.6. However, the reading remained below the final reading of 50.0 in October. Business activity dropped the most in as many as eight months. New work declined at the highest rate ever since July 2016. New orders from overseas posted the sharpest decline ever since September 2014 because of a lack of clarity with respect to Brexit. In spite of a sustained drop in workloads, the latest data revealed the stabilization of staffing numbers across the service sector. Input costs remained at the weakest level ever since August 2016. However, the prices charged registered a modest increase, suggesting that passive demand conditions continued to put pressure on operating margins. Looking forward, business confidence touched a four-month high.
Forecast for December 2019 – 49.6
#6: United States Flash Manufacturing PMI (12/16/2019 Monday 14:45 GMT)
In the United States, the Manufacturing PMI reported by IHS Markit was revised upward to the 52.6 level in November from the preliminary reading of 52.2 and 51.3 in the prior month. The reading, however, pointed to a strong expansion in the factory activity in as many as seven months, driven by faster expansions in new orders and production with the strengthening of both foreign and domestic client demand. Business confidence, however, remained historically muted. This is because global economic uncertainty continued to weigh down expectations.
Forecast for December 2019 – 52.6
#7: United Kingdom Bank Stress Test Results (12/16/2019 Monday 16:00 GMT)
The results of the stress test carried out by the Bank of England in 2018 showed the banking system in the country was resilient to deep and simultaneous recessions. In spite of facing loss rates that are consistent with the financial crisis, the aggregate CET1 capital ratio of the major UK banks after the stress test was twice the level prior to the crisis. All participating banks remained above the risk-weighted Tier 1 leverage and CET1 capital hurdle rates. The test results also showed that the banks would also be able to meet real economy credit demand even in stressful situations.
#8: New Zealand ANZ Business Confidence (12/17/2019 Tuesday 00:00 GMT)
In New Zealand, the Business Confidence Index reported by ANZ jumped to the -26.4 level in November from the -42.4 level in the prior month. The reading for the month beat analysts’ expectations that the index will come in at -30.8. This is the highest reading ever since December last year. Expectations of firms as regards their activity over the next year rose to its highest level this year, 12.9 from -3.5 in October. Also, employment, investment, and exports moved into positive territory. As far as sectors are concerned, both commercial and residential construction increased.
#9: Australia Monetary Policy Meeting Minutes (12/17/2019 Tuesday 00:30 GMT)
The Reserve Bank of Australia releases the Minutes of the Monetary Policy Meeting 11 times in a year two weeks after the announcement of the Cash Rate. It provides a detailed account of the most recent meeting of the central bank’s board. In addition to providing in-depth insights into the country’s economic conditions that impacted their decision as regards setting interest rates, the minutes offer clues on future decisions. If the tone of minutes is more hawkish than expected, it is very good for the Australian dollar.
#10: Euro Area ECB President Lagarde Speaks (12/18/2019 Wednesday 08:30 GMT)
Christine Lagarde, President of the European Central Bank, is scheduled to deliver opening remarks in Frankfurt at an ECB colloquium to be held in honor of Benoît Cœuré. The markets often turn volatile during her speeches. This is because traders make an attempt to understand the direction of interest rates.
#11: United Kingdom CPI (12/18/2019 Wednesday 09:30 GMT)
In the United Kingdom, the consumer prices fell to the 1.5 percent level on a year-on-year basis in October from the 1.7 percent level in the prior month. The reading for the month came in below analysts’ expectations of 1.6 percent and was the lowest inflation rate ever since November 2016 mainly because of a slowdown in housing and utility prices. Tariff cap imposed by a regulator pushed down the costs of electricity and gas.
Forecast for November 2019 – 1.5 percent
#12: Canada CPI (12/18/2019 Wednesday 13:30 GMT)
In Canada, the Consumer Price Index rose 0.30 percent on a month-on-month basis in October.
#13: New Zealand GDP (12/18/2019 Wednesday 21:45 GMT)
New Zealand’s GDP grew 0.5 percent on a quarter-on-quarter basis the June quarter, slowing down from the 0.6 percent expansion recorded in the prior period. However, the reading for the second quarter beat analysts’ expectations for a 0.4 percent expansion. The main contribution to the GDP growth came from the services sector, which represents approximately 67 percent of the economy. The services sector grew 0.7 percent, driven by retail trade and accommodation; transport, postal, and warehousing; and financial and insurance services. Further, the primary industries increased by 0.7 percent, driven by agriculture, forestry, and fishing. Meanwhile, the secondary sector contracted because of a decline in the manufacturing and construction sectors.
Forecast for third quarter 2019 – 0.5 percent
#14: Australia Employment Change (12/19/2019 Thursday 00:30 GMT)
Australia shed 19,000 jobs in October 2019 after the employment growth for the previous month was revised downward to 12,000. This marked a decline in employment for the first time ever since May 2018.
Forecast for November 2019 – 15,200 jobs are expected to be added
#15: Australia Unemployment Rate (12/19/2019 Thursday 00:30 GMT)
On a seasonally adjusted basis unemployment rate in Australia rose to the 5.3 percent level in October from the 5.2 percent level in the prior month. The reading for the month matched with analysts’ expectations. The number of jobless people in Australia rose by 17,100. On the other hand, employment unexpectedly fell for the first time in as many as 17 months.
#16: Japan BoJ Monetary Policy Statement (12/19/2019 Thursday 03:00 GMT)
Released eight times in a year, the Bank of Japan uses the monetary policy statement as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ decision on setting interest rates and purchasing assets. In addition, the statement provides a commentary on the economic conditions that impacted members’ decision. More importantly, it provides the nation’s economic outlook and offers clues on future outcomes.
#17: United Kingdom Retail Sales (12/19/2019 Thursday 09:30 GMT)
In the United Kingdom, retail trade edged down 0.1 percent on a month-on-month basis in October after remaining steady in the prior month. The reading for October missed analysts’ expectations for a gain of 0.2 percent. Sales declined for household goods; textiles, clothing, and footwear stores; other stores; non-food stores; food stores and non-store/repair shops. On the other hand, sales increased for automotive fuel and non-specialized products. On a year-on-year basis, retail sales jumped 3.1 percent, the same percentage as in the prior month and well below analysts’ expectations of 3.7 percent.
Forecast for November 2019 – Retail trade is expected to increase by 0.1 percent
#18: United Kingdom MPC Official Bank Rate Votes (12/19/2019 Thursday 12:00 GMT)
In the United Kingdom, the Monetary Policy Committee of the Bank of England voted by a majority of 0-2-7 to hold the Official Bank Rate at the 0.75 percent level during the policy meeting in October. Analysts had expected the Monetary Policy Committee members to take a unanimous decision amid global trade wars and Brexit uncertainties. Further, the central bank lowered its forecast on GDP. It is now expected that the British economy would achieve a growth of 1.0 percent by the end of 2019. The GDP growth would be 1.6 percent by end 2020, 1.8 percent by end 2021, and 2.1 percent by end 2022. Further, policymakers said that monetary policy would be suitably adjusted in either direction based on the changes in the economic conditions in order to make sure that inflation returns to the target of 2 percent.
MPC Official Bank Rate Votes Forecast for December 2019 – 0-2-7
#19: United Kingdom BoE Monetary Policy Summary (12/19/2019 Thursday 12:00 GMT)
Released on a monthly basis, the Bank of England’s Monetary Policy Committee uses the Monetary Policy Summary as a tool to communicate with investors as regards the monetary policy. It provides the outcome of the members’ vote on setting interest rates as well as implementing other policy measures. In addition, it provides a commentary on the economic conditions that impacted their decision. More importantly, it provides the country’s economic outlook and offers clues on future votes.
#20: United Kingdom Current Account (12/20/2019 Friday 09:30 GMT)
The United Kingdom’s current account narrowed to £ 25.2 billion in the June quarter from £ 33.1 billion in the prior quarter. Analysts had expected the current account gap to come in at £ 19.5 billion. The trade deficit dropped to £ 11.4 billion from £ 22.7 billion. The goods gap fell to £ 34.1 billion from £ 48.1 billion, and the services deficit declined to £ 22.7 billion from £ 25.3 billion. Further, the secondary income deficit narrowed to £ 6.7 billion from £ 6.9 billion. On the other hand, the primary income shortfall widened to £ 7.1 billion.
Forecast for the third quarter of 2019 – the current account deficit is expected to come in at 15.5 billion
#21: Canada Core Retail Sales (12/20/2019 Friday 13:30 GMT)
In Canada, core retail sales, which exclude autos, rose 0.2 percent on a month-over-month basis in September after the 0.2 percent decline in the prior month. The reading for the month beat analysts’ expectations for a 0.1 percent increase.