- US wage growth set to fall well short of inflation
- UK Consumer Borrowing uptick would offer some cause for cheer
- Will a stumble in Chinese PMI data reignite stimulus calls?
The final week of the quarter is set to get off to a relatively subdued start in terms of macroeconomic data, but the lull won’t last for long. On Tuesday morning, Australian Retail Sales figures for February are released and with the RBA still juggling its approach to rate hikes, the expectation here – a decline from 1.8% in January to around 1% in February on a monthly basis – is likely to be met with a lukewarm response. However given global levels of uncertainty right now, a print as forecast or even slightly below seems unlikely to suggest a more dovish approach will be needed.
Also on Tuesday, Germany’s Gfk Consumer Confidence reading for April will be published. Unsurprisingly given rapidly increasing costs faced by the general public and concern as to what’s unfolding in Ukraine, this number is expected to come under some pressure. After the -8.1 posted in March, suggestions are that this could be as low as -15 and any shortfall beyond that would almost inevitably rattle both consumer facing stocks and the Euro.
And there’s also UK Consumer Borrowing data due for release. This covers February and expectations are for a modest uptick from the £0.6bn which was added in the previous month. Any growth here would be applauded as a sign of there still being some confidence over growth, although this period will largely omit Russia’s invasion into Ukraine. With that in mind, it’s a month-on-month decline that would arguably be the most damaging to confidence, rocking UK-centric stocks and the Pound as a result.
Onto Wednesday and German Inflation for March will be in focus. This number has been lagging the situation in both the US and UK, but rising energy prices must be taking a toll. As such the annualised reading is expected to move ahead of 6%, whilst the month on month print could be edging towards 2%. That’s going to serve up a fresh warning over the cost of living squeeze, especially coming off the back of lacklustre wage growth.
With the month end in sight, we also have the ADP Payroll Survey out today, which is tipped to show decent jobs growth of around 400,000 additions and whilst that’s well below the levels seen a year ago, does suggest there’s a normalisation in play here. That may help take some of the heat out of inflationary concerns in the US, although with many of these remaining structural rather than demand driven, any cheer here could be in short supply.
There’s a key set of Chinese PMI releases due on Thursday from the National Bureau of Statistics. These are tipped to show Manufacturing PMI slide below the break even 50 mark for the first time since October, something which has the potential to reinforce that message from Beijing about the need for policy stimulus. As we saw earlier in the month, such news has the ability to serve up a significant boost to markets, both domestically and further afield. It’s arguably any accompanying narrative rather than the print itself which will have the impact here.
Also on Thursday, look for US Personal Income and Expenditure data for February. Income is again expected to outstrip spending and whilst such prudence would be applauded by many economists, it also reflects a lack of confidence by consumers over the outlook, having the potential to rattle sentiment in specific stocks and even the broader US dollar as a result.
Rounding out the week, we have the US Non-farm Payrolls plus assorted other employment metrics. Arguably the more important point to focus in on will be average hourly earnings, which are tipped to have risen by 5.5% on an annualised basis, so well below inflation. Failure to see the unemployment rate drop however could once again reignite the debate as to whether US companies need to be a little more generous towards their staff – and a little harder on shareholders.
Article by Tony Cross
of Monk Communications