Eurozone – Leading indicators improve further

Eurozone – Leading indicators improve further

US – Thin market liquidity alongside labor market report release on Good Friday

Eurozone – Leading indicators point to continued growth

This week, several major leading indicators for the Eurozone economy have been published. The poll data on the industry PMI for the entire Eurozone improved further in March and indicates on average slight growth of industrial production for 1Q15. The main impulse came from new orders, which indicates continued output growth in the months ahead.
Furthermore, the ifo business climate index rose in March to the highest level since May 2014. The situation in the manufacturing, wholesale and retail sectors improved again, while the construction indicator dropped again, albeit from a high level. In addition, the Eurozone is currently feeling a tailwind from rising consumer confidence, which climbed in March to its highest level since 2007. In total, the current data indicates prolonged growth of the Eurozone economy in 1Q15. With a bit of optimism, one could even expect an acceleration of the growth when compared to the previous quarter (+0.3% q/q). Next week will be quiet with respect to data releases. The unemployment rate, which is due on Tuesday, might be of interest for the markets.

Important releases from US next week

In the upcoming week, important macro indicators from the US are scheduled. On Wednesday, the ISM index, a survey among large US manufacturing companies, will be released. The index has softened somewhat since the beginning of the year, but continues to indicate an expansion of the sector. Strikes at west-coast harbors in February likely had a negative impact on the February reading; the upcoming release will show to what extent. On the same day, ADP, a large private US personnel agency, will issue its estimate of the employment change during March, giving a first glimpse of the condition of the labor market. On Friday, the official labor market report will be released. Given the last FOMC meeting, the data will be watched even more closely than usual, as the last verbal early warning indicator before the first rate hike was removed from the FOMC’s statement. So, the upcoming macro data will decide when the first rate hike will be announced. With this guidance from the FOMC, markets could react quite strongly to any surprise in either direction. Additionally, liquidity on markets will be thin around the Easter Weekend. Equity markets will only react to the data on Monday in the US and on Tuesday in Europe. Trading in other asset categories will be limited on Friday and Monday.