- Economists see German industrial production falling in March
- US Small Business Optimism Index for April is on track to ease for a third month
- US job openings in March are expected to slide for the first time in three months
Germany remains in the spotlight today for European data releases via the March report on industrial production. Later, two US updates will provide more context for assessing last week’s upbeat employment numbers.
First up is the Small Business Optimism Index for April, followed by the monthly figures on job openings at the close of the first quarter.
Germany: Industrial Production (0600 GMT): Factory orders rose for a second month in March, providing more support for recent forecasts that Europe’s biggest economy is picking up speed in the second quarter.
“Manufacturing orders continue to be vibrant,” the Economy Ministry advised. “Economic conditions in manufacturing are favourable. This is also reflected by strongly improved business climate indicators.”
Good news, but the bullish trend in orders isn’t expected to spill over into today’s update on industrial output. Why? Comparing domestic and foreign orders in yesterday's report offers a clue.
Although new orders overall increased 1% in March, domestic demand slumped 3.8%, which was offset by a stronger 4.8% climb in foreign bookings, according to Reuters.
Econoday.com’s consensus forecast sees industrial activity sliding 0.7% in March – the first monthly decline this year.
Nonetheless, analysts think that industrial production will soon revive, as implied by the firmer trend for factory orders.
"Combined with buoyant confidence indicators today's new orders data suggest that industrial production could finally gather some momentum,” an economist at ING Diba advised in a research note.
“There is increasing evidence that contrary to previous cycles industrial production could be the lagging factor of the current positive economic expansion.”
US: Small Business Optimism Index (1000 GMT): The mood among small business owners has brightened substantially in recent months, but the sharp deceleration in payrolls in April for these companies could be a warning flag.
Although the number of US jobs overall rebounded sharply last month, companies with less than 50 employees added just 61,000 new positions – half as much compared with March.
To be fair, March’s increase of 117,000 was unusually high by recent standards, which suggests that April’s softer risemay be a one-time payback. Perhaps today’s April report on sentiment will provide fresh support for thinking positively.
Economists expect the NFIB Small Business Optimism Index will dip slightly to 103.8 from 104.7 in March, according to Econoday.com’s consensus forecast. That still translates to a solid improvement compared with last year’s pre-election readings.
A hefty downside surprise in today’s update, however, would be worrisome in the wake of a sharp deceleration in the growth rate of new workers at small firms.
US: Job Openings and Labour Turnover Survey (1400 GMT): Employment growth picked up last month. Is that enough to lift the number of job openings out of its narrow range that’s prevailed for months?
Economists have their doubts, at least for today's update. The consensus forecast calls for modest decline to 5.670 million openings for March, down from 5.743 million in the previous month.
That’s still a healthy rate, but openings have been stuck in neutral since last September.
The upbeat growth in new jobs in April hints at something better for the second quarter in terms of openings. So does the Conference Board’s (CB) Employment Trends Index (ETI), a multi-factor measure of the labour market that popped last month.
“The Employment Trends Index has been expanding rapidly in 2017, suggesting that robust job growth will continue into the summer,” said CB’s chief economist for North America. “A tight labour market is about to get much tighter, with solid employment growth occurring at a time when there is almost no growth in the working-age population.”
If so, job openings should respondwith solid gains in the months ahead. Using the latest ETI data as a guide, we may see a downpayment on those expected increases with a stronger-than-expected print in today’s results.
Disclosure: Originally published at Saxo Bank TradingFloor.com