- March factory orders in Germany on track to revive after February’s sharp setback
- Will the Eurozone Retail PMI confirm the hard-data rebound in consumer spending?
- US jobless claims set to dip after upbeat news on ADP’s estimate for March payrolls
Germany’s manufacturing sector is in focus today with the March release of factory orders. We’ll also see the March update of the Eurozone Retail PMI, followed by the weekly release of US jobless claims.
Germany: Factory Orders (0600 GMT): Manufacturing growth in Europe’s biggest economy accelerated in March, according to March survey data for the sector. Will today’s release on factory orders for last month show that the upbeat mood among manufacturers is linked with an improvement in demand from customers?
Economists think we’ll see a solid report: new orders are projected to bounce back sharply in March after tumbling in the previous month. Econoday.com’s consensus forecast sees orders rising 4.5% over February. The implied one-year change also looks solid via a 4.6% year-over-year increase.
Markit’s survey data for the sector certainly looks bullish. The Germany Manufacturing PMI rose to 58.3 last month, the highest level since 2011. “German manufacturing ended Q1 with impressive growth, with new export orders in particular increasing at the fastest rate in nearly seven years in March,” noted an economist at IHS Markit.
If today’s report on factory orders matches expectations, the news will boost confidence that tomorrow’s monthly release on industrial output will support the acceleration narrative.
Firmer economic data will also renew calls in some corners that it’s time for the European Central Bank to start winding down monetary stimulus. The president of the Bundesbank, for example, said in an interview yesterday that the time is approaching for the ECB to “take its foot off the gas.” Jens Weidmann asserted that “the economic recovery in the euro area is robust and will continue.”
Eurozone: Retail PMI (0810 GMT): Consumer spending on retail goods and services accelerated in February, according to the hard data published by Eurostat this week. But if that’s a sign that a sustainable recovery is unfolding, Markit’s survey data for the retail sector suggests otherwise.
Today’s Eurozone Retail PMI update for March is expected to remain in contractionary terrain for the second month in a row, according to TradingEconomics.com’s econometric forecast. The projected dip to 49.6 from 49.9 in February is only slightly below the neutral 50 mark. But if the prediction is right, the upbeat report via spending's hard data in February may be headed for a reversal in the next update.
But for the moment, there's no sign of trouble in official numbers for February. Spending in the euro area rose at the fastest pace in fourth months. The year-on-year trend perked up, too, advancing 1.8% vs. 1.5% in the previous month. That doesn’t look like the raw material for weak survey data. Will today’s PMI report continue to suggest otherwise?
US: Initial Jobless Claims (1230 GMT): Yesterday’s surprisingly strong jobs report for the private sector in March throws cold water on the view that the US economy is stumbling. Today’s weekly update on jobless claims is expected to strengthen the argument that the labour market is still expanding at a healthy clip.
US companies added 263,000 workers last month, according to the ADP Employment Report. The gain marks the fifth month in a row of 200,000-plus gains for payrolls. “Job growth is off to a strong start in 2017,” said the chief economist at Moody’s Analytics, which co-produces the data with ADP. “The gains are broad based but most notable in the goods producing side of the economy including construction, manufacturing and mining.”
Today’s update on new filings for unemployment benefits is expected to provide another round of data that supports a positive outlook for jobs creation. Econoday.com’s consensus forecast calls for a modest dip in new claims to a seasonally adjusted 250,000 for the week through April 1.
If the forecast is right – the ADP offers no reason to think it’s not – the news will reinforce the outlook that the US jobs machine will continue to hum along at an solid pace in the second quarter. In turn, the Federal Reserve with have another reason to consider raising interest rates again, perhaps as early as next month's FOMC meeting.
Disclosure: Originally published at Saxo Bank TradingFloor.com