This will be a quiet week in the euro area terms of economic data releases. Inflation is forecast to have dropped by one-tenth in March to 1.7% y/y. In Germany, the ZEW index could be down for the first time since November……….……
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A host of economic data is due for release this week in the United States. The first manufacturing sector surveys for the month of April (Empire, Philly Fed) should confirm a moderate expansion. In March, industrial output should increase, driven by utilities and by a marginal improvement in manufacturing; housing starts are estimated to be up, after declining in January-February, and permits should stabilise on the relatively high levels recorded in February. The March CPI is expected to come in marginally lower, due to seasonal adjustment factors on gasoline prices, and to a 0.2% m/m rise of the core index. The Beige Book could shed some light on the causes and expected duration of the slowdown laid bare by recent data on activity and employment.
Monday 15 April
United States
– The NY Fed’s Empire index is estimated to drop in April to 6.5 from 9.24 in March. In March the survey had corrected compared to February, although the expectations component had improved further, providing markedly positive indications on all sub-components. The March ISM dropped from its very high level in February, from 54.2 to 51.3, while staying compatible with a level of around 7.5 for the Empire index. The manufacturing sector should strengthen back once fears of a serious disruption or interruption of economic activity tied to the enforcement of the automatic Federal spending cuts are overcome.
– The homebuilders’ confidence index drawn up by the NAHB should rise back in April to 45, from 44 in March. The trend of residential construction remains positive: the confidence index should start rising again after correcting for two months, albeit probably at a much slower pace than has been the case in the past year.
Tuesday 16 April
Euro area
– The second reading of March inflation should confirm the 1.7% preliminary rate, down from 1.8% in February. Month-on-month, prices should be up by 1.2% m/m due to seasonal effects. The price trend net of the energy and fresh food components is estimated to rise slightly, to 1.5% y/y. We stick to our forecast of broadly stable inflation in the coming months, leaving the annual average at 1.7%. Risks to the inflation outlook are still skewed to the downside, for the core inflation component in particular.
– Germany. The ZEW index is expected to drop in April to 47.8, from 48.5 in March. This would be the first decline since last November. The index would in any case stay on levels not far off the highs hit in the opening months of 2010. The current situation index, on the other hand, is estimated to increase in April to 14, from 13.6 in March, on the rise for the fifth month in a row.
United States
– The March CPI is expected to show a -0.1% m/m drop. While gasoline prices increased in the month, seasonal adjustment factors imply a negative contribution of gasoline in the month.
The core index should be up by 0.2% m/m, with rents and imputed rents still at around 0.2% m/m: in the months ahead, the increase in housing units available for rent should help cool the rise in rents in the central months of the year.
– Housing starts are expected to rise in March to 935k, from 917k in February. In January and February, housing starts underwent sharp corrections after peaking in December (982k).
Employment data in the construction sector were positive both in February and March, and support expectations for a recovery in housing starts. Housing permits should correct marginally, to 935k from 939k in February.
– March industrial output should be up by 0.3% m/m, fuelled by the utilities sector as a result of particularly cold weather conditions. Manufacturing output is estimated to have increased at a much smaller pace (+0.1% m/m), in light of the decline in working hours seen in the Employment Report. The ISM index’s drop in March, with the output component on the decline to 52.2 from 57.6 in February, justifies expectations for a modest growth in manufacturing sector output. The mining sector should experience a correction, given the weak payroll numbers in the sector in March.
Wednesday 17 April
United States
– The Fed will release its Beige Book, in preparation of the FOMC meeting of 1st May. The report will be important in verifying whether the anecdotal evidence gathered by the Fed’s regional branches will confirm a slowdown in activity as seen in the recent data, and if so, for what reasons. Moreover, the Beige Book could shed some light on the labour market trend, after the sharp slowdown in employment in March.
Thursday 18 April
United States
– The Philadelphia Fed index is forecast to come in at 3 in April, from 2 in March. In March the Philly Fed survey returned into positive territory after two markedly negative months (-12.5 in February), with all the main components showing a recovery. Manufacturing sector data weakened in March compared to the start of the year; we expect the Philly Fed to be broadly unchanged in April compared to the previous month, with 6-month indicators still at high levels.
Appendix
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