Economic Week Ahead

Main Macro Events This Week

United States: US data is front and center ahead with the February employment report highlighting Friday, though as forecast it’s not likely to alter the outlook on the labor market or necessarily the Fed trajectory. We forecast a 190k gain along with a steady 4.9% unemployment rate. Also on tap is a small 0.1% forecast hourly earnings rise and likely 34.5 hour workweek (median 34.6). Initial jobless claims have been trending lower of late and this could lend some upside risk to payrolls this month. As a prelude to payrolls the economic calendar will close out the month of February (today) with Chicago PMI expected to dip to 54.5 in February (median 53.1) from 55.6, NAR pending home sales may rebound to 107.7 in January from 106.8 and the Dallas Fed index is still seen tortured by the oil sector at -33.0 in February, up slightly from -34.6 in January. The ISM manufacturing index (Tuesday) should show minor improvement to 48.5 from 48.2, though still in contraction, accompanied by construction spending set to rise 0.5% for January vs 0.1%. Vehicle sales are projected to increase 0.8% to a 17.6 mln unit pace. MBA mortgage application report is on tap (Wednesday), along with the February ADP Employment report, which should show a 180k gain for the month (195k median), below the January figure of 205k. There’s quite a data hurdle (Thursday), starting with the revision of Q4 productivity seen at -3.2% (median -3.1%) vs -3.0% initially, while unit labor costs may accordingly be revised up to 4.7% (median 4.5%) from 4.5%. Initial jobless claims are set rebound 10k to 282k for the week ending February 27, while the ISM Non-Manufacturing index should reveal sluggish growth at 54.0 in February (53.1 median) vs 53.5 and factory goods orders rebound 0.7% in January (median +1.5%) vs -2.9% in December. Wrapping up the week will be wholesale trade data (Friday). Fed’s Beige Book (Wednesday) adds to the rich tapestry of data and events, but it shouldn’t provide any major new insights or alter outlooks on the economy.

Canada: The Canadian calendar is packed with top tier economic releases this week. The Q4 and December GDP reports (Tuesday) along with the trade figures (Friday) highlight. December GDP is expected to moderate to a 0.1% m/m pace, while the separate real GDP measure is seen edging 0.3% higher in Q4. The reports will show a domestic economy that was limping along, yet still expanding, going into the new year. The January trade report is expected to show a widening in the deficit to -C$0.8 bln from -C$0.6 bln in December. A variety of other reports are on the docket: The Q4 current account (today) is seen narrowing to a -C$15.5 bln deficit from -C$16.2 bln in Q3. The industrial product price index (today) is expected to decline 0.1% m/m in January after the 0.2% drop in December. The Ivey PMI (Friday) is projected to slump to a still firm 60.0 in February from the seasonally adjusted 66.0 in January. Productivity (Friday) is seen flat in Q4 (q/q, sa) after the 0.1% gain in Q3. The RBC manufacturing PMI for February is due out Tuesday.

Europe: this week’s data releases will add to the arguments of the doves with national inflation data suggesting that overall EMU HICP (today) will fall back to -0.1% y/y. Final PMI numbers for February will only confirm that confidence is hit by uncertainty about the outlook for the world economy and ongoing market turbulences and the EMU Feb Manufacturing PMI (Tuesday) is expected to be confirmed at 51.0 and the Services PMI (Wednesday) at 53.0 (medians same). Data still indicates expansion across both sectors, but growth momentum is clearly ebbing. For now though at least labour markets continue to improve, which underpins consumption trends, but this is a lagging indicator and if growth slows down it is only a matter of time until this will also be reflected in unemployment data. For February we still see another dip in the German sa jobless total (Tuesday) of 10K (median same), which would leave the unemployment rate unchanged at a very low 6.2%. The overall Eurozone rate for January meanwhile is seen steady at 10.4% (median same). Data releases also include more national unemployment and inflation numbers as well as German retail sales and import prices.

United Kingdom: The calendar this week, in chronological order, brings January BoE lending data (today), the February Markit PMI surveys for manufacturing (Tuesday), construction (Tuesday) and services (Wednesday). Lending is likely to be strong, while markets will be keeping close tabs on the PMI reports following weakness in January data. We expect the BoE report to show a GBP 1.3 bln rise in unsecured consumer lending, near to underlying trend, and a jump in mortgage approvals to 74.0k from 70.8 in the previous month, likely to be reflective of a rush of so-called buy-to-let purchases ahead of tax changes. The manufacturing PMI has us expecting an ebb to a 52.3 headline reading (median 52.2), down from 52.9 in January. The data is too early to reflect the jump in Brexit concerns that has happened over the last week, but will still show the erosive affect that slowing Eurozone and global growth is having. The construction PMI is anticipated at 55.5 from 55.0, holding near recent trends. The services PMI should come in at 55.1 (median 55.0), down from 55.6, which would leave the composite figure at 55.7, down from 56.1.

China: In China, data includes January leading indicators (today) and February PMIs (Tuesday). The Caixin/Markit series is expected to dip to 48.2 from 48.4, while the official CFLP reading is seen at 49.2 from 49.4. February services PMI (Thursday) are penciled in at 52.0 from 52.4.

Japan: January preliminary industrial production (today) rebounded nicely and came in at 3.7% m/m, as compared to the previous -1.7% outcome. January retail sales fell to a -0.1% y/y pace from flat for large retailers, though total sales should improve slightly to a -0.7% y/y clip from -1.1% y/y overall. January housing starts improved to 0.2% from -1.3%. January unemployment (Tuesday) likely remained steady at 3.3%, with the job offers/seekers ratio static as well at 1.27. January PCE (Tuesday) is forecast at a -3.0% y/y rate from the -4.4% y/y outcome in December. February auto sales are on the docket (Tuesday) as well. January Markit/Nikkei PMI (Wednesday) is expected to fall to 51.0 from 52.3, as the Q4 MOF capex survey (Wednesday) is seen slowing to 7.0% y/y from 11.2% y/y previously.

Australia: calendar is headlined by the RBA meeting (Tuesday), expected to result in no change to the 2.00% policy rate setting. A busy economic calendar has real Q4 GDP (Wednesday), expected to slow to a 0.5% growth rate after the 0.9% gain in Q3 (q/q, sa). January building approvals (Tuesday) are seen dipping 1.0% m/m following the 9.2% bounce in December. The current account deficit (Tuesday) is projected to worsen to -A$20.5 bln in Q4 from -A$18.1 bln in Q3. The trade report (Thursday) is expected to show a narrowing in the surplus to -A$2.8 bln in January from -A$3.5 bln in December. Retail sales (Thursday) are seen rising 0.3% m/m in January after the flat reading in December.