Macroeconomics: The Day Ahead for 17 December

  • Further rash of first division US, UK and Canadian data accompany Germany’s Ifo and ZEW surveys, rate decisions in Chile and Hungary, and some ECB speakers

  • UK: Base effects set to pace rebound in wage growth, labour demand seen sluggish

  • Germany: Ifo and ZEW survey seen broadly steady at historically weak levels

  • USA: Retail Sales seen boosted by Black Friday promotions, some tariff pre-emptive purchases, strength seen broad based

  • Canada: CPI seen steady, as autos & recreation neutralize upward pressures from shelter, but likely to be overshadowed by Freeland resignation

EVENTS PREVIEW

UK labour data, US Retail Sales and Industrial Production and Canadian CPI will be the focal points statistically, while ECB speakers feature on the events schedule. Today is also likely to see Hungary’s MNB hold rates at 6.50% thanks to inflationary pressures from a weak HUF, though retaining an easing bias, while Chile’s BCC is forecast to cut 25 bps to 5.0%, with its Q4 inflation report due tomorrow.

UK: Today’s labour and tomorrow’s inflation data are expected to reinforce the case for the BoE holding rates this week, as is universally expected. Average Weekly Earnings are forecast to show headline jumping to 4.7% from 4.3% y/y, and basic pay to 5.0% from 4.8%, primarily due to adverse base effects, with other anecdotal evidence suggesting a further easing in wage pressures. Employment measures are anticipated to show HMRC Payrolls contracting modestly (-5K), having also dipped in 4 of the past 5 months, while the much maligned LFS Employment measure is seen falling back into line with a marginal increase of +5K, while the Unemployment Rate holds steady at a still low 4.3%.

Germany: Following on from yesterday’s mixed set of ‘flash PMIs’, the German Ifo is expected to remain dire at 85.7, though a modest pick-up in Expectations is expected to be offset by a further dip in the Current Assessment, with the ZEW Expectations survey expected to dip to 6.6 from 7.4. The fact remains that without a federal government, the structural headwinds to a recovery remain all too obvious, per se any upside surprises will not signal a potential turnaround.

U.S.A.: a bumper run of key activity and survey data has Retail Sales, which are expected to show broad strength with headline up 0.5% m/m, and all core measures up 0.4%, with promotional discounts and perhaps some tariff related pre-emptive purchases pacing those gains. Industrial Production has echoed the Manufacturing ISM, posting only one m/m increase in the past four months, but is forecast to reverse October’s fall with a rise of 0.3%, with Manufacturing Output also seen reversing October’s fall with a gain of 0.5%. Meanwhile, the NAHB Housing Market Index is seen little changed at 47 vs. 46, as Trump related optimism for the sector is stymied by rising mortgage rates, and continued affordability challenges.

Canada: Today’s CPI data are likely to further post hoc support for last week’s 50 bps BoC rate cut. Headline CPI is seen up just 0.1% m/m, as continued upward (though easing) pressure from Housing (shelter) is likely to be offset by a drag from autos, recreation and indeed education, which would leave the y/y rate unchanged at 2.0%. Core CPI measures are expected to be fractionally lower at 2.4% and unchanged at 2.6% y/y. Despite some unfavourable base effects in coming months, the overall projection for 2025 CPI is broadly steady around target, though what is implemented in terms of Trump 2.0 tariffs could throw a spanner in the works. Indeed the talking point for Canadian markets will be the surprise and abrupt resignation of Chrystia Freeland as Finance Minister, just hours before she was due to give a fiscal and economic update to parliament, and in response to PM Trudeau’s attempt to shunt her into a different cabinet post, as profound differences over how to deal with Trump 2.0 broke out into the open.

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