UK Data
- During the week Halifax House Prices for November. Previous -0.5%m/m & 8.9%y/y
- Monday 9.30am CIPS Manufacturing PMI for November. Previous 52.9 (index)
- Wednesday 9.30am CIPS Services PMI for November. Previous 53.1 (index)
- Thursday 9.30am Industrial Production for October. Previous -0.4%m/m & -0.2%y/y
- Thursday 9.30am Manufacturing Production for October. Previous -0.6%m/m & -0.1y/y
- Thursday 12.00pm BoE MPC Interest Rate Announcement
The focus for Sterling last week hinged very much on the negative housing data released from the UK. Nationwide building society reported that house prices dropped by 0.8%m/m in November, the sharpest fall it has recorded in 12 years; coupled with Mortgage approvals falling in October to 88k new loans, the lowest in nearly three years. In contrast, retail prices rose in November at the fastest rate in nearly a decade, as sales growth accelerated unexpectedly according to a survey by the CBI. The first week of December brings a raft of data from the UK economy, the main highlight being the Bank of England’s interest rate decision on Thursday where we expect rates to be left on hold at 5.75%. Mervyn King faces the challenge of balancing the risks to inflation with the downside risk if activity slows sharply.
US Data
- Monday 3.00pm ISM Manf Survey for November. Previous 50.9 (index)
- Wednesday 3.00pm ISM Non-Manufacturing for November. Previous 55.8 (index)
- Friday 1.30pm Non-Farm Payrolls for November. Previous 166k
- Friday 1.30pm Unemployment Rate for November. Previous 4.7% y/y
- Friday 3.00pm University of Michigan Sentiment Survey for December. Previous 76.1 index
Dollar weakness was the recurring theme from the US last week, with largely expected weak housing data. Sales of existing US properties fell by 1.2% in October to 4.97%m/m, followed by an increase in new claims for unemployment insurance to the highest level since February. In contrast, US GDP rose by 4.9% in the third quarter on an annualised basis, the strongest for four years, from an initial estimate of 3.9%. However, these figures were largely compiled prior to the credit crunch and recent economic indicators lean heavily towards a US economic slowdown. This week, attention turns to Friday’s employment report where the market will be looking to see whether last month’s strong numbers can be sustained.
EU Data
- Monday 9.00am Manufacturing PMI for November. Previous 51.5 (index)
- Monday 10.00am Eurozone Unemployment for October. Previous 7.3%
- Tuesday 10.00am PPI for October. Previous 2.7% y/y
- Wednesday 9.00am Services PMI for November. Previous 55.8 (index)
- Wednesday 10.00am Retail Sales for October. Previous 0.3% m/m & 1.6% y/y
- Thursday 12.45pm ECB Interest Rate Announcement (followed by news conference at 1.30pm)
Last weeks Eurozone data largely revolved around the credit squeeze, as one month Euribor spiked violently by 60 basis points to 4.87%, the sharpest move ever recorded. Coupled with the surging Euro, there is should be increased pressure on the ECB to cut interest rates when they meet this week. However, inflationary worries are a continuing concern as the Eurozone feels the pinch from rising global energy and food prices. November’s HICP came in at 3.0% y/y on Friday, weighted by German CPI inflation which reached 3.3% in November, the highest since the launch of the Euro. Therefore, a cut is seen to be unlikely when the committee meet on Thursday, however, investors will pay close attention to the accompanying statement to gauge Trichet’s thoughts on the outlook for monetary policy.
Interest rate outlook
| Country |
Current rate |
Last change |
Date of change |
Next meeting |
| UK (MPC) |
5.75% |
+25bps |
05/07/07 |
6th December |
| US (FED) |
4.50% |
-25bps |
31/10/07 |
11th December |
| EU (ECB) |
4.00% |
+25bps |
06/06/07 |
6th December |