Key economic releases, week commencing October 19th, 2020

19 Oct, 2020 | Market Insights, Week Ahead | 0 comments

  • UK inflation in spotlight as Bank of England persists with negative rates narrative
  • October Flash PMI readings to health check economies on both sides of the Atlantic
  • UK Business Confidence could collapse but likely to remain healthier than 2019 average

The week starts on another quiet note, with US construction data being the first key point of note on Tuesday. Building Permit applications for September offer something of a barometer of the economic outlook, and expectations are that these will once again come in around the 1.5 million mark. That’s very much in line with the readings seen towards the end of 2019, but shows no sign of any pent up demand from the COVID shut down filtering through.

UK Inflation readings for September will be published on Wednesday morning and with the Bank of England still happy to moot the idea of negative rates, signs of life here could make this controversial move a little more difficult to justify.  The month-on-month headline rate should move back into positive territory, whilst the annualised core (excluding food & fuel) rate may breach 1%. These numbers are far from impressive but would make the argument for paying banks to hold money that bit tougher.

Also on Wednesday, the latest CBI Quarterly Business Optimism reading will be published. This figure has been predominantly negative since the Brexit vote back in 2016 and although it broke higher following last December’s election, understandably gains here were short-lived. Suggestions are that a number around the -15 mark will be posted and whilst that’s far from upbeat, it will still be above the average reading seen during 2019.

Germany’s GfK Consumer Confidence reading is out on Thursday morning, providing some valuable forward looking guidance as to how Europe’s largest economy thinks it will fare as the second wave of COVID digs in. After the last reading of -1.6, the situation is expected to worsen once again with a print of around -3, however that’s still significantly above the sharply negative numbers seen earlier in the year.

Later on Thursday, Eurozone Consumer Confidence readings for October will be generated. This number is expected to remain around the -15 level where it’s been holding steady since June. The market is arguably resigned to the downbeat sentiment here, so the risk to watch for is anything coming in much below the consensus forecast.

Rounding off the week on Friday, we have a slew of October flash PMI readings from both sides of the Atlantic. Eurozone PMI data is expected to show all three metrics in decline, although manufacturing should remain above the break-even 50 mark. A slightly more upbeat picture is expected from the UK, although concerns will be running high that the dominant services sector could slide into contraction. Finally, a robust showing is expected from the US data with both services and manufacturing prints tipped to show only a modest decline from September.

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