Key economic releases, week commencing December 14th, 2020

14 Dec, 2020 | Week Ahead | 0 comments

  • Eurozone & UK PMI data to show continued economic impact of COVID.
  • UK Retail Sales and Average Wages could offer cause for cheer
  • Bank of England’s MPC to be closely watched for policy hints over Brexit response.

There’s not much of note on the macroeconomic calendar for Monday but Tuesday sees the latest UK employment data released. The UK Claimant Count for November is expected to build again following the last two months of contraction. Whilst that in itself is a cause for concern, the figures are still being masked by government support schemes so there’s arguably a lot more pain to come. A build of more than the forecast 30,000 could therefore create cause for concern.

UK Average Earnings for October are also set for release and this number is expected to keep marching higher, which offers some cause for optimism. Wages excluding bonuses are tipped to have risen by more than 2% on a year-on-year basis, comfortably outstripping inflation.

Wednesday’s schedule is set to be dominated by the latest Flash PMI Releases for December, covering the UK, Eurozone and USA. As always, the key number to watch is the break-even 50 mark. Manufacturing looks set to remain strong with the Eurozone tipped to see a print of around 53, whilst the UK may do even better with forecasts close to 55. However services are tipped to fall short, with around 41 in the currency bloc although the domestic print may only just miss the 50 mark by a thin margin, again offering hope that the easing of lockdown restrictions is having a positive economic benefit. US readings will also be released later in the day, with a rather more optimistic outlook expected to be seen across the Atlantic, although readings for both in the mid 50’s would be slightly down on the previous month.

UK Inflation for November is also due on Tuesday, with an annualised print of around 0.7% forecast. Although that’s well below target, given the economic backdrop sustaining at least some growth here has to be seen as positive.

Thursday sees the Bank of England’s Monetary Policy Committee announce their next steps. Expectations are that no change will be seen, but with Brexit edging closer to a disruptive no-deal outcome and the conversation over negative interest rates ongoing, any clues here could provide further direction. The Central Bank has noted its scope to mitigate the impact of Brexit is limited so hints at fresh rounds of policy easing could hit Sterling, although may offer some support for stocks, especially those dominated by foreign currency earnings.

Rounding out the week on Friday, the UK Gfk Consumer Confidence reading for December is expected to show some month-on-month improvement, but remain mired in negative territory with a print around -28 forecast.

November’s UK Retail Sales figures are expected to show further normalisation, with an annualised number around the 6% mark forecast. Again this will be welcomed by policymakers as it shows consumers remain a key part of rebuilding the economy after the COIVD shock of earlier in the year.

The German Ifo Business Climate Indicator for December is also due and after the initial rebound in the summer, is expected to show further deterioration. For much of the last decade, this printed between 95 and 105, but having first slipped in the latter part of 2019, the number has remained rather underwhelming since. This latest reading will be well above the 75.4 posted in April, but is set to be down a fraction on last week’s 90.7.

With the impending Christmas break, this will be the last macroeconomic calendar for 2020, with the next issue ready for Monday January 4th, 2021.

Article by Tony Cross of Monk Communications. This article first appeared in Octo
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