Consensus has Germany's industrial production falling 1.1% for August
Recent lower PMI figures suggest UK's industrial production likely to be weak
US jobs figures to show slightly higher number of openings
Industrial reports for Germany and Britain are in focus today. With Europe’s economic trend looking increasingly troubled, the monthly updates on output for these two countries will be closely analysed.
Later, the relatively resilient labour market in the US is under review with the government’s update of job openings for August.
Germany: Industrial Production (06:00 GMT) Factory orders in Europe’s biggest economy tumbled the most in five years according to yesterday’s release of August data. The news strengthens the case for expecting that the Eurozone is sliding into a new recession.
Fading confidence is a key factor, say analysts – a point that's emphasised in yesterday’s report from Sentix on the outlook for the Eurozone via a survey of investors. Sentix reported that its sentiment index dropped to its lowest reading in more than a year. As a result, “a formal euro-area recession – two consecutive quarters of shrinking output – becomes more and more probable,” Sentix advised.
Today’s hard-data update on German industrial output for August will be closely read for additional perspective on judging the odds for a new recession. Unsurprisingly, economists anticipate a round of red ink. The consensus forecast sees production falling 1.1% for the monthly comparison, according to Econoday.com.That’s a reasonable assumption for several reasons, including the recent deterioration in business survey data for Germany’s manufacturing sector. In last week’s update of Markit’s purchasing managers' index (PMI), the headline September reading slipped just below the neutral 50.0 threshold to a 15-month low. For the first time since early 2013, Germany’s crucial manufacturing sector is contracting, albeit slightly, according to the PMI figures.
“Geopolitical risks, especially the crisis in Eastern Ukraine, have made companies cautious about their investment plans, despite very favourable fundamental and funding conditions,” an economist at Berenberg Bank in London told Bloomberg yesterday. “Once these uncertainties fade, confidence and thus investment should rebound.”
For today, however, the cloud of uncertainty is on track to thicken a bit more. 
UK: Industrial Production (08:30 GMT) The pace of manufacturing activity in Britain continues to decelerate, according to the latest business survey data from Markit. The purchasing managers' index for this sector dipped to its slowest growth rate in more than a year in the September report.
The weakening trend is worrisome given the deteriorating state of macro just across the Channel. Europe appears to be caught in a new recession and there’s sure to be blowback for Britain, which until recently was posting some of the strongest rates of growth among the major industrialised nations. But suddenly a new phase dawns. Indeed, the Eurozone is Britain’s largest trading partner and so trouble across the Channel is sure to migrate.
No wonder that a new phase of slower growth seems to describe the state of UK macro these days. The question is whether there’s more than a lesser pace of recovery in store? It’s too soon to tell, although today’s monthly update on industrial activity will surely be read with that question lurking in the background.
“The strong upsurge in the UK manufacturing sector at the start of the year appears to have run its course, with the September PMI at a 17-month low and growth of new orders easing to near-stagnation,” a Markit economist noted in last week’s release.
The lower PMI figures of late strongly suggest that today’s numbers for August industrial production will weaken as well. As a result, the recent forecasts that the Bank of England was close to raising interest rates have suddenly become ancient history.
US: Job Opens & Labour Turnover Survey (14:00 GMT) Last week’s encouraging numbers on nonfarm payrolls for September suggest that moderate economic growth is intact for the US. Employers minted 248,000 jobs last month, a substantially stronger increase over the revised gain for August. “I think we’ve finally reached that promised land of a self-sustaining, self-reinforcing economic recovery,” PNC’s chief economist commented last week.
The ongoing expansion for payrolls has been anticipated in recent months in the government’s estimate of job openings, which have increased robustly since the spring. But the upswing has turned sluggish in the past two updates. Job openings in July dipped slightly to 4.673 million vs. 4.675 million for the previous month, according to the US Labor Department.
The mild setback, although marginal, marks the first monthly decline since January. Is this a sign that the improvement in job creation has peaked? No, not yet, according to the crowd’s estimate. Job openings are set to resume an upward bias, according to the consensus forecast.
Today’s release is projected to show a slightly higher number of openings for August: 4.673 million, according to Econoday.com’s survey of economists. If so, it’s still premature to worry about the US labour market’s forward momentum.