Macroeconomics: The Day Ahead for 30 April

The final day of April brings a bumper day for statistics and corporate earnings, but precious little in the way of other events other than the US Treasury announcement of the quarterly refunding. China’s official NBS and Caixin Manufacturing PMI will likely be the highlight of the overnight run of data, which also included Japan and South Korea Industrial Production, Australia, Japan and Germany Retail Sales, Japan’s labour data and French GDP and CPI. Ahead lie Eurozone and numerous EU national Q1 GDP readings, Eurozone CPI, German Unemployment, US Employment Cost Index (ECI), Consumer Confidence, House Prices and Chicago PMI. Colombia’s central bank is expected to cut rates a further 50 bps to 11.75%, while the UK and Germany sell 5-yr debt, and the Netherlands auctions 10-yr. On the corporate earnings front, Samsung Electronics and Tokyo Electric Power feature in Asia, Adidas, HSBC, Mercedes-Benz, Volkswagen and Whitbread feature in Europe, while the US looks to ADM, AMD, Diamondback Energy, Eli Lilly, Molson Corrs, Mondelez and Starbucks amongst others.  From the overnight run of data, not covered below, the UK BRC Shop Prices slide (-0.3% m/m 0.8% y/y) underlines a robust disinflationary trend in goods prices, which on the one hand will reassure the BoE, but on the other hand also suggests that domestic demand is weak, even if the Lloyds Business Barometer held steady overall, but saw a slight increase in price increase intentions.

** China – April PMIs ** 

While both Caixin and NBS Manufacturing PMIs beat expectations, they nevertheless declined m/m, underlining that March’s post LNY pick-up was not indicative of a genuine acceleration in activity, while the relatively sharp drop in the NBS Non-manufacturing points to a continued lack of confidence. Overall, it points to a need for more measures to bolster confidence, above all the hefty drag from the property sector’s woes.

** Eurozone – Q1 GDP, April CPI **

Q1 advance GDP is expected to post a marginal 0.1% q/q increase (vs. Q4 -0.1%), but with Spain at 0.7% q/q vs expected 0.4% and France also better than forecast at 0.2% q/q, most notably posting growth in Domestic Demand ex Inventories of 0.4% q/q, and wildcard Ireland rebounding 1.1% q/q, the risks look to be skewed firmly to the upside, much of course still depending in Germany (exp. flat q/q) and Italy (0.1% q/q). On balance, the rebound appears to have a little more momentum than expected, which if sustained might point to a shallower trajectory for ECB rate cuts.  Rising energy prices are expected to be the primary driver of an anticipated 0.6% m/m rise in Eurozone CPI (mirroring German HICP yesterday), which would still leave the y/y rate unchanged 2.4%, but a gradual easing in Services inflation, in part due to base effects, is expected to see core inflation drop quite sharply to 2.6% y/y from 2.9%, per se reinforcing already entrenched expectations of an initial June ECB rate cut. 

** U.S.A. – Q1 ECI, April Consumer Confidence **

The Q1 Employment Cost Index kicks off this week’s busy run of labour market indicators, and obviously has particular sensitivity coming just ahead of tomorrow’s FOMC rate decision, along with the labour differential (Jobs Plentiful minus Hard to Get) in the Consumer Confidence report. It is forecast to pick up to 1.0% q/q from 0.9%, paced above all by minimum wage rises in many states (average 5.8%, median 3.7%), which hint at some upside risk to the consensus. Meanwhile, Consumer Confidence is expected to post a modest slip to 104.0 from 104.7 in March 104.8 in February, with a slight rise in gasoline prices, slower labour demand (according to the latest Beige Book) and some rather overcooked media reporting on inflation picking up appear to impart some downside risks. That said, the latter report is prone to some often hefty revisions, which alter perceptions about underlying trends.