There’s a wide spectrum of economic news on tap for Thursday, including the monthly policy announcements from the Bank of England (12:00 GMT) and the European Central Bank (12:45 GMT), which kicks off its quantitative easing program this month. Meantime, keep an eye on three numbers today on both sides of the Atlantic for updated macro perspective via Markit’s Retail Purchasing Managers Index (PMI) for the Eurozone, US jobless claims, and US factory orders.
EU: Retail Purchasing Managers Index (09:10 GMT) Yesterday’s upbeat report on retail spending in the Eurozone for January offered more evidence that a recovery is underway. Sales increased well above expectations for both the monthly and year-over-year comparisons. The news certainly looks encouraging, but is the implied growth destined to fade?
There are fears that the pace of jobs growth may be slowing in the US, so today's jobless claims release and Friday's nonfarm payrolls figure will attract close scrutiny. Photo: iStock
That’s the implied message in recent numbers via Markit’s survey data for Europe’s retail sector, which means that today’s PMI release for February deserves close attention. In contrast with the hard data for retail spending, Europe’s retailers are in a glum mood, and becoming more so in recent months. The January reading of the purchasing managers index (PMI) slipped to 46.6 – the lowest since last September and well below the neutral 50.0 mark that separates growth from contraction. In short, the outlook for retail for Europe overall doesn’t look good.
Why, then, does the hard data on retail spending suggest otherwise? By some accounts, the steep decline in energy costs is driving the latest gain. The news “reinforces our belief that Eurozone growth will pick up markedly to 1.6% in 2015 as it benefits appreciably from very low oil prices, a much more competitive euro and substantial ECB stimulus,'' said IHS Global Insight’s chief European economist.
It’s interesting to note that another Markit survey with fresh data out this week aligns with the retail sales numbers. The February update of the Eurozone PMI Composite Output Index, which tracks the manufacturing and services sectors, reflected broad-based economic growth at a seven-month high. “There were clear signs of the Eurozone economy reviving in February, with stronger inflows of new business and rising business confidence suggesting growth should continue to pick up in March,” Markit’s chief said in a statement. That’s a strong clue for expecting that today’s retail PMI report will post a sizable rebound and, in the process, strengthen the case for expecting that the positive momentum of late may can be sustainted. 
US: Initial Jobless Claims (13:30 GMT) Yesterday’s report on private payrolls for February via ADP’s estimate looks encouraging, but it appears that the pace of growth is slowing. After accelerating to a monthly gain of 284,000 last November, the advance has been trending lower, dipping to a 212,000 advance last month. That’s still a decent rise, but the softer trend suggests that the labour market may not be as strong as it appeared in the last few months.
Adding to the worries is the rise in jobless claims in recent weeks. The four-week average of new filings for unemployment benefits ticked up to 294,500 (seasonally adjusted) last week, the biggest jump since late-January. Claims are still low by the standards of recent history, so we shouldn’t read too deeply into the latest rises. Indeed, economists expect that today’s report will pare claims down to 300,000 from 313,000 in the previous update, based on Econoday.com’s consensus forecast.
If the prediction holds, it’ll be easier to conclude that the labour market will continue to grow in the months ahead. Even so, the question of whether the growth rate in payrolls is destined to slow will remain topical.
A stronger clue for managing expectations, for good or ill, arrives in tomorrow’s official jobs report from Washington. Based on the latest ADP numbers, combined with what the crowd’s expecting, another whiff of deceleration will show up in the government’s payrolls report on Friday. 
US: Factory Orders (15:00 GMT) Speaking of deceleration, the trend in factory orders is looking unmistakably weak these days. Red ink weighs on the annual comparisons for the last two monthly updates through December, while the monthly changes have been negative since last August.
Analysts cite a number of reasons for seeing the recent weakness as less than a smoking gun for the business cycle. One factor is the labour dispute at the country’s West Coast ports – a dispute that’s recently been resolved. Weak demand in Europe hasn’t helped, although the latest run of upbeat news for the Eurozone suggests that the prospects for stronger sales are picking up.
Meanwhile, there are mixed messages in the latest updates on business survey data. The Institute for Supply Management this week said that its manufacturing index dipped for the fourth month in a row. Although the 52.9 reading for February still reflects growth, the pace is the slowest in more than a year. Markit’s PMI for US manufacturing paints a mildly brighter outlook, with the February data rising to a four-month high of 55.1.
Considering the signals from both reports, it’s reasonable to argue that US manufacturing remains on track for a moderate rate of growth. Today’s numbers for factory orders aren’t expected to conflict with that message. Briefing.com’s consensus forecast calls for a modest 0.6% rebound in January orders. If so, this indicator will post its first monthly gain in half a year. 
Disclosure: Originally published at Saxo Bank TradingFloor.com