Looking ahead to the coming week, data out of China dominates the economic calendar, with key indicators such as GDP and trade. US and UK inflation will also be watched closely, but policy meetings by the Bank of England and the Bank of Canada are unlikely to be market movers.
All eyes on China GDP
Chinese inflation data will start the week on Monday. Annual CPI is forecast to head higher for a fourth straight month to increase to 2.5% in March. Although the recent pick-up is not considered as worrisome, it could make the People’s Bank of China more cautious to cutting rates further in the near term. On Wednesday, March trade numbers will be the next focus. Exports are forecast to rebound from February’s sharp deceleration, which was caused by the Lunar New Year celebrations. Exports are expected to increase by 2.5% year-on-year, though this is a fraction of the 25.4% drop seen the prior month.
Friday will be even busier as industrial production, retail sales, fixed asset investment and GDP numbers are all due the same day. Industrial output growth is expected to quicken from 5.4% y/y in February to 5.9% y/y in March, while retail sales are forecast to rise by 10.4% y/y. But the main attention grabber will be the first quarter GDP readings. China will be the first of the major economies to report GDP data for the first quarter. The economy is forecast to slow further during the first three months of the year to 6.7% y/y from 6.8% in the final quarter of 2015. Recent PMI data has shown signs of improvement in March, but a weaker GDP reading could still send panic in financial markets about the health of the world’s second largest economy.
US inflation to accelerate further
It will also be a busy week for the US, with retail sales and consumer prices being the key releases. Retail sales data out on Wednesday is expected to show a 0.4% m/m rebound in March following a 0.1% drop the prior month. Also due the same day are producer prices for March. Inflation data are out on Thursday, and the March figures are expected to show further acceleration in consumer prices. Headline CPI is forecast to rise to 1.2% y/y in March from 1.0% in February. But core inflation is expected to stay steady at 2.3%. The Fed has yet to show concern at the higher inflation rates as it awaits for more evidence that the rise can be sustained.
Rounding up the week on Friday are industrial production numbers for March and the University of Michigan preliminary reading for April. Also to watch for the US are speeches by a number of Fed policymakers, including William Dudley on Monday, John Williams on Tuesday and Jerome Powell on Thursday.
Australian jobless rate to edge up
Australia’s falling unemployment rate had been a sign of the economy’s resilience against global headwinds. But the decline appears to have levelled off, as the jobless rate has been stuck in a range of 5.8-6.0% for the past five months. The trend is expected to continue in March, with the unemployment rate (due on Thursday) rising slightly to 5.9% from 5.8% in February. Also to watch next week are the latest NAB business conditions (Tuesday) and Westpac consumer confidence (Wednesday) readings.
Eurozone industrial output to turn negative
Industrial production data out of the Eurozone on Wednesday is unlikely to bode well for first quarter GDP growth. Industrial output is forecast to have contracted by 0.5% month-on-month in February. The only other Eurozone data next week is the final CPI reading for March on Thursday. Annual headline inflation is expected to be confirmed at -0.1%, and core inflation at 1.0%. The ECB’s March monetary policy accounts had revealed the central bank’s concern on the risks of second-round effects following a recent weakening in core inflation. This suggests the core rate and how it progresses over the coming months could be a deciding factor on future ECB policy moves.
No surprises from Bank of England and Bank of Canada
Monetary policy meetings by the Bank of Canada (Wednesday) and Bank of England (Thursday) are not expected to produce any surprises, as both central banks are forecast to keep rates steady. The Bank of England’s meeting minutes, which are published at the same time as the decision announcement, are unlikely to show a major change in tone in April’s meeting, given that the Bank will release its updated quarterly outlook next month. But any revised comments on the pound’s recent weakness and ‘Brexit’ risks will be interesting to watch.
Meanwhile, the UK will also see the release of the latest inflation figures. Annual inflation in the UK is forecast to tick up by 0.1% to 0.4% in March and core inflation to rise slightly to 1.3%.