- Bank of England speech may offer clues over timing of rate hike
- Jump in Chinese Producer Price Index will sustain inflation threat globally
- US Consumer Credit set to post further growth
The week starts with Construction PMI data covering November from both the UK and EU. Not only will these numbers provide some indication of broader economic sentiment, but they also have the potential to reassure markets that supply chain issues are now ebbing away. The Eurozone print is expected to show a third consecutive month of gains, rising modestly from the 51.2 posted in October, whilst the corresponding UK reading may soften a little from last month’s 54.6, although should remain well ahead of the break even 50 mark.
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Also on Monday, there’s a speech from BoE Deputy Governor Ben Broadbent on the outlook for growth, inflation and monetary policy. This could offer some clues as to the timing of that first UK interest rate hike – there’s little belief it will be at the December meeting, but with inflation remaining stubbornly high, anything that hints at a move very early in the New Year could lend support to the Pound but see stocks put under pressure.
On Tuesday morning, the German ZEW Economic Sentiment Index for December will be released. This number has a useful forward-looking attribute to it and is expected to paint a picture of a normalising economy. There’s still some unpredictability in this metric as supply chains stabilise and we hopefully look beyond COVID, with a pint somewhere between October’s 22.3 and November’s 31.7 expected.
US Consumer Credit for October is also set to be published on Tuesday. A reasonable level of growth here will send a message of confidence amongst consumers who are undeterred by rising inflationary pressures, something which will be significant, given price increases continue to outstrip growth in wages. After the $30 billion recorded in September, an uptick of around 10% is anticipated.
Wednesday’s highlight is likely to be the JOLT Job Openings for October. This is another useful – if slightly dated – barometer of the US economy, with expectations again being that there will be around 10 million vacancies advertised, little changed from the September print. That’s just shy of the record 11 million vacancies recorded in the summer. Any lurch higher would have the potential to raise concerns over sustaining growth into the new year.
Thursday sees a couple of key prints out of China. The Inflation Rate for November is expected to come in at a modest 1.7% on an annualised basis, up slightly from the previous 1.5%, but the more significant reading is likely to be PPI. This reflects input costs paid by manufacturers and given China’s export focus, increases here are ultimately passed on to other markets. The number could break 14%, up from the 13.5% seen in October, and has the potential to present fresh challenges for central banks globally as they continue to show reluctance to pulling the trigger on rate hikes.
Rounding off the week, we have the latest UK GDP data covering October. Year on year, a reading of just over 5% is expected, down from the 5.3% seen a month ago, but that’s unlikely to cause any concern as it reflects the theme of post-pandemic normalisation. Monthly growth is tipped to slow slightly as well to around 0.4%. The challenge here is ensuring that the number doesn’t fall too much lower, especially at a time when the Bank of England is eyeing rate hikes.