In a quiet week for U.S. economic data, economists expect solid retail sales growth, a slight drop in consumer sentiment and limited inflationary pressure.
Recent data showed second-quarter growth picked up across Europe, ending an 18-month economic decline. Reports next week will provide an early indication of how the euro-zone recovery progressed in the third quarter.
Both industrial production and exports are likely to have fallen in July, suggesting that neither the industrial sector nor net trade are likely to have matched the positive contributions that they made to gross domestic product in the second quarter, Capital Economics’ James Howat noted. Barclays is looking for a 1.3 percent month-on-month drop in euro-zone industrial production -- the sharpest fall since September of last year.
The Bank of England’s Monetary Policy Committee’s decision to tie guidance to the unemployment rate means that Wednesday’s labor-market figures will come under close scrutiny. “We think that the unemployment rate may have fallen from 7.8 percent to 7.7 percent,” said Samuel Tombs, U.K. economist at Capital Economics. “But we doubt that the rate is likely to fall much further in the coming months.” The MPC plans to keep its key interest rate on hold as long as unemployment exceeds 7 percent.
In Japan, the most important data release will be the second estimate of Q2 GDP (Sunday at 7:50 p.m. EDT). These will be a key input into the decision on whether to go ahead with the planned consumption tax hike, although other economic data (notably the Tankan survey for Q2, due on Oct. 1) will play some part too, according to Marcel Thieliant, Japan economist at Capital Economics. Barclays expects Q2 GDP growth, quarter-on-quarter, to be revised sharply upward to 0.9 percent from an initial 0.6 percent estimate. Any upward revision would strengthen the case for pressing ahead with the planned hikes in the consumption tax.
China’s economic prospects appear to be brightening after the government rolled out measures to support growth. August data due this weekend are expected to further signal that growth momentum is stabilizing. Nomura’s Lavanya Venkateswaran anticipates growth in industrial production and fixed-asset investment will remain stable, and expects retail sales to rise slightly as unusually high temperatures boost sales of summer goods. The net flow of total social financing should increase, as should export growth. Inflation measured by the consumer price index probably eased slightly, largely due to base effects, while deflation measured by the producer price index should lessen, given the sharp rise in the input price component in the official purchasing managers’ index -- a sign that the inventory overhang is easing.
Elsewhere, there are scheduled monetary policy meetings in New Zealand, Korea, the Philippines, Indonesia and Pakistan.
Indonesia has hiked interest rates by a cumulative 125 basis points over the past couple of months in an attempt to support the struggling rupiah, which has fallen by about 10 percent since the recent sell-off began at the start of August. The most recent hike was at an unscheduled meeting on Aug. 29. The consensus is for rates to be left on hold, but a few analysts are expecting another hike. “This week’s announcement is likely to prove a close call,” Capital Economics’ Gareth Leather said. “Either way, the rate hikes which have already been introduced are likely to hold back the economy.”
Below are entries on the economic calendar Sept. 9-13. All listed times are EDT.
11 a.m. -- Federal Reserve Bank of San Francisco President John Williams (a nonvoter on the Federal Open Market Committee this year) offers “A View From the Fed” at the 55th National Association for Business Economics annual meeting in San Francisco.
3 p.m. -- Economists look for an expansion of $13.87 billion in consumer credit outstanding in July. A large chunk of this probably came from the nonrevolving component, which has been driven largely by growth in federal student loans.
Norway -- Parliamentary elections.
Italy -- Senate committee will present its preliminary findings on Silvio Berlusconi’s parliamentary immunity.
7:30 a.m. -- National Federation of Independent Business small business optimism index for August.
Serbia -- Repo rate.
France -- Extraordinary parliamentary session.
Euro zone -- European Central Bank Executive Board Member Joerg Asmussen speaks on “The global monetary policy stance: what are the risks?” in Brussels.
China -- August industrial production, fixed-asset investments and retail sales.
7 a.m. -- The Mortgage Bankers Association’s, or MBA’s, Mortgage Index for the week ending Sept. 6.
10 a.m. -- Wholesale inventories probably rose by 0.3 percent in July, following a 0.2 percent decline in the prior month. Wholesale prices likely gained 0.4 percent, matching June’s pace.
Euro zone -- ECB Executive Board member Asmussen speaks in Berlin.
New Zealand -- Monetary-policy statement and Reserve Bank of New Zealand official cash rate.
Germany -- August final harmonized index of consumer prices.
U.K. -- July International Labor Organization unemployment rate.
8:30 a.m. -- Import prices likely climbed by 0.4 percent in August, largely reflecting a gain in petroleum prices. Barclays expects a flat reading on nonpetroleum prices, following three consecutive declines, consistent with the strengthening in the exchange rate in recent months. Meanwhile, export prices probably declined by 0.1 percent.
8:30 a.m. -- Economists expect initial jobless claims to edge up to 329,000 for the week ending Sept. 7 from 323,000 in the prior week.
2 p.m. -- The U.S. federal government is expected to post a budget deficit of $150 billion in August, which would be a roughly $40 billion improvement from the $190 billion deficit posted during the same month last year.
Indonesia -- Bank Indonesia reference rate.
Korea -- South Korea 7-day repo rate.
Philippines -- Bangko Sentral ng Pilipinas policy rate.
Euro zone -- ECB publishes monthly report.
U.K. -- Bank of England Gov. Mark Carney attends Treasury Committee hearing on August inflation report.
Euro zone -- ECB President Mario Draghi speaks at a conference dedicated to the introduction of the euro in Latvia.
Chile -- Overnight rate target.
Peru -- Reference rate.
Euro zone -- Industrial production.
Greece -- June unemployment rate.
8:30 a.m. -- Retail sales probably rose by 0.4 percent in August, building on the 0.2 percent gain recorded in July. The increase in the headline series will be driven by the jump in auto sales last month. The 1.8 percent monthly increase in the number of vehicles sold by manufacturers in August, which took sales back to prerecession levels, points to a similar-size rise in the value of autos sold by retailers. Gasoline-station sales and a bounceback in building-material sales also contributed to the headline increase. Core retail sales, excluding autos, gasoline and building materials, likely rose by 0.3 percent. That represents a slowing from the prior month’s pace of 0.5 percent.
8:30 a.m. -- August’s producer price index release is likely to show that there are hardly any price pressures in the goods inflation pipeline. Headline PPI inflation may have fallen to 1.3 percent year-on-year, from 2.1 percent in July. Core finished goods PPI should increase a soft 0.1 percent in August month-on-month, which should put the year-on-year figure at 1.3 percent. Overall, continued slow growth and excess capacity imply limited inflation risk.
9:55 a.m. -- After improving for seven consecutive months, the University of Michigan’s index of consumer sentiment declined to 82.1 in August from 85.1 in July. Economists expect consumer sentiment to deteriorate again, to 81.5 in September. The potential escalation of U.S.-Syria tensions may have raised some worries in recent weeks. The weak August jobs report probably didn’t help, either.
Russia -- Overnight deposit rate and overnight repo rate.
Euro zone -- Trade balance for July.
Sources: Central banks, European Commission, Reuters, Market News, Capital Economics, Barclays, Bank of America Merrill Lynch.