Several updates on inflation throughout Europe are scheduled today, including revised data for Germany’s consumer price index for October. Later, a pair of US releases are expected to show that the labour market will continue to expand at a moderate pace.
Germany: Consumer Price Index (07:00 GMT) Europe’s largest economy received some much-needed good news on the economic front recently: industrial production in September, for instance, rebounded 1.4% The revival is part of the reason for Germany's Economic Ministry to announce this week that the macro trend steadied in the third quarter. "After the slight contraction in gross domestic product in the second quarter, which was partly down due to special effects, the economy in the third quarter has at least stabilised, according to the indicators we have seen," the ministry advised in its latest monthly report.
But if there’s a bit more confidence for assuming that Germany will sidestep a recession, the optimism ends there. Growth is sluggish and will probably remain so for the near term. That beats a downturn, but the soft trend, if it persists, raises the risk that gravity will prevail eventually.
The fear for Germany is that gravity will prevail, and that it will take the rest of
Europe down with it. Photo: Thinkstock
Today’s inflation report will serve as a reminder that disinflation, and perhaps worse, remains a real and present danger for Germany, and by extension for the rest of Europe. The estimate for the year-on-year growth in consumer prices is expected to remain at 0.8% through October, according to the government’s provisional estimate. Today’s revision will likely confirm that pace, which represents a four-year low. Although recent data suggests that outright deflation isn’t an imminent threat, the unusually low trend of late highlights the fact that the mild expansion is vulnerable.
Germany’s economy will probably grow in the fourth quarter, but just barely. Next year’s growth is expected to be a spare 1%, according to a forecast published this week by a government panel of advisors. The report blames “geopolitical tensions” for the downward revision. Whatever the reason, stagnation risk will continue to lurk, as today’s inflation data will show. 
US: Initial Jobless Claims (13:30 GMT) Weekly filings for unemployment benefits fell more than expected in the last update, offering a fresh dose of optimism for the labour market. New claims declined 10,000 to a seasonally adjusted 278,000, or just above a 14-year low. The message in this leading indicator is clear: economic momentum remains positive.
The biggest threat for the US business cycle at the moment lies beyond its borders - Europe in particular - rather than any internal troubles. If there’s a risk lurking on the horizon for America, it’s not obvious in the claims data. Arguing that growth is accelerating is still a dubious notion, but the case for expecting moderate growth remains compelling.
Today’s update isn’t likely to tell us otherwise. The consensus forecast sees claims rising a bit to 280,000 for the week through November 8 - but that's still near the lowest levels seen in well over a decade. Conspiracy theorists, some with a political axe to grind, claim that upbeat economic data of late have been fabricated. The alternative view is that the economy really is recovering… still. A radical interpretation, perhaps, but one that’s likely to earn another dose of support in today’s release.
US: Job Openings and Labor Turnover Survey (15:00 GMT) In line with recent numbers on jobless claims, the government’s estimate of job openings tells us that the labour market continues to expand. Bullish momentum certainly looks convincing lately from the vantage of this indicator. Openings climbed in August to 4.835 million - the highest since 2001.
Today’s September update is expected to pull back a bit from that high, but only slightly. The consensus forecast calls for a modest drop to 4.8 million, although the projected decline still leaves plenty of room for optimism. Indeed, this year's robust upward trajectory for this measure suggests that the economy’s capacity to create new jobs remains intact. If the pace of openings can hold on to its recent gains, the bullish trend implies that the growth in nonfarm payrolls will strengthen.
The weak spot for jobs is the sluggish rise in wages. But in terms of new positions minted, the recent 200,000-plus monthly gains in payrolls in recent months - an encouraging improvement from late-2013/early 2014 - will probably persist. What would it take to see even stronger increases in the labour market? A bigger-than-expected rise in today’s job-openings data would be a good start. 
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