- Retail spending in Britain on track to rebound in September after sliding in August
- Philly Fed’s manufacturing index expected to ease but remain in positive territory
- US existing home sales projected to tick higher in September
A busy day of economic news is on tap for Thursday, including the European Central Bank’s monetary announcement at 1145 GMT and the 1230 GMT press conference. Meanwhile, keep your eye on three numbers today: the September update on UK retail sales, the October data for the Philadelphia Fed’s manufacturing index, and US existing home sales for September.
UK: Retail Sales (0830 GMT): Yesterday’s report on the labour market revealed a mixed picture for Britain at the end of the third quarter. Will today’s update on retail spending for September provide more encouragement for thinking that the country can successfully navigate the rocky post-Brexit path ahead?
The jobless rate in the UK remained unchanged at a low 4.9% last month, but the claimant count inched higher for the second month in a row. Note, too, that the August estimate for newly unemployed workers was revised sharply higher to a gain of 7,100 from the initial estimate of 2,400.
Nonetheless, some analysts think the latest news is still upbeat overall. The labour market numbers offer “the latest piece of evidence which shows the economy has fared better than expected since June’s [Brexit] referendum,” said a senior economist at Hargreaves Lansdown.
Today’s report turns the focus on consumer spending. The crowd’s looking for a moderately upbeat report, including a 0.2% rise in retail sales in September after a 0.2% slide in the previous month. The year-over-year trend, however, is projected to slip to a 4.5% gain, down from 6.2% previously.
A softer annual trend for spending isn’t unexpected in the wake of recently published survey data for Britain’s retail industry. The Confederation of British Industry’s (CBI) Distributive Trades Index fell to minus 8 last month after reaching a six-month high of positive 9 in August.
In any case, the stakes are high with each new release amid heightened concern that Britain’s post-Brexit future will create challenges for economic growth. Accordingly, the market will be keenly focused on today’s spending data for evaluating what may lie ahead.
US: Philadelphia Fed Manufacturing Index (1230 GMT): A preliminary look at US manufacturing activity in October delivered disappointing news on Monday. The New York Fed’s regional index fell sharply to a minus 6.8 reading for this month, well below expectations for a modest gain that would have pushed the benchmark to its first positive reading in three months.
Will today’s October update on the Philly Fed’s regional index offer better news? Yes, according to survey data from Econoday.com. Although the consensus forecast sees the benchmark dipping to positive 7 for this month from September, the forecast translates into the third straight positive reading.
Even assuming that the Philly Fed index remains in the black, the combined data for the two regional benchmarks published to date continue to imply that growth will remain sluggish for manufacturing generally.
“Manufacturing growth slowed to a crawl in September, suggesting the economy is stuck in a soft patch amid widespread uncertainty in the lead up to the presidential election,” the chief economist at IHS Markit noted recently.
Today’s report may offer a mildly brighter outlook for the Philly Fed’s region, but the numbers aren’t likely to change the view that manufacturing activity generally in the US is stuck in a rut.
US: Existing Home Sales (1400 GMT): Yesterday’s update on residential housing construction painted a mixed profile. While housing starts fell vs. the previous month for a second time in September, newly issued building permits – considered a leading indicator for starts – perked up to the highest level so far this year.
The latest figures overall convinces a macro strategist to project continued growth for the foreseeable future. “Single-family construction is maintaining a steady climb, with permits for single-family structures pointing to continued growth ahead,” according to Brittany Baumann at TD Securities.
Today’s update on the appetite for home purchases is expected to offer a degree of support for an upbeat outlook. Econoday.com’s consensus forecast calls for a modest rise in existing sales to 5.35 million units (annualised rate) for September. That’s a middling number relative to recent history, but it’s firm enough to suggest that the housing recovery will roll on.
Disclosure: Originally published at Saxo Bank TradingFloor.com