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March 30, 2014 2:16 pm
This week markets will focus on the monthly policy meeting of the European Central Bank on Thursday and the US labour market report the following day, with important purchasing managers’ surveys for the US, UK and China also due.
The ECB’s meeting is preceded by the initial “flash” estimate of eurozone inflation in March, released on Monday. While further policy easing by the ECB is expected later this year, analysts do not expect the ECB to announce any changes at this month’s meeting.
However, eurozone inflation is expected to fall again, to 0.6 per cent, following lower German inflation numbers published last week. A surprise on the downside in the inflation report may yet cause the ECB to take action on Thursday.
Eurozone and German unemployment for March are both published on Tuesday. The rate for the eurozone is likely to remain at 12 per cent but this composite measure conceals the differing speeds of recovery in the leading economies. In February unemployment fell in Germany and Spain but rose in France and Italy. If the German rate falls below February’s 6.8 per cent this would be a new low since the reunification of the country in 1992.
In the US, the two most closely watched monthly releases are expected to confirm the health of the recovery. On Tuesday, the manufacturing index from the Institute for Supply Management is forecast to be 54.0, up slightly from the February level, and signalling robust expansion in the sector. On Friday, the employment report is expected to show that non-farm payrolls rose by 190,000 in March, with the unemployment rate falling to 6.6 per cent.
The non-manufacturing index from the ISM, out on Thursday, is expected to bounce back after a fall in February to a four-year low.
The March PMI covering the Chinese manufacturing sector, from HSBC and Markit, is also published on Tuesday. Analysts expect a third successive number below 50, implying contraction, fuelling concerns about Chinese growth.
In the UK both manufacturing and services PMIs are likely to produce results consistent with strong overall growth, although the manufacturing index is expected to fall back slightly from February’s reading of 56.6. As usual the details of the manufacturing report will give pointers on the potential for rebalancing in the economy, with investment intentions and export orders closely watched.
Data will also be published on the housing market. Bank of England numbers out on Monday are likely to show new mortgage approvals were slightly lower in February, at 75,000, with the bad weather affecting house sales.
The two main measures of house price inflation are also released and both are forecast to see an acceleration in house price growth, to 9.4 on the Halifax measure and 9.6 per cent on the Nationwide index. However, both these national measures are somewhat distorted by the much higher rates of growth seen in London than elsewhere in the UK.
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