The week sees flash PMI data releases plus the UK’s Autumn Budget and ongoing Brexit discussions.
The main data releases include flash PMI survey data for the US, eurozone and Japan, providing insights into economic health mid-way through the fourth quarter (a free-to-read full round-up of October’s PMI results is available here).
US PMI and FOMC minutes to guide Fed policy
October PMI data had shown the US economy reviving after hurricane-related disruptions in prior months, with growth accelerating in manufacturing and remaining strong in services. Cost pressures cooled, however, as supply chain disruptions eased. The November readings will provide a clearer picture of the health of the US economy in terms of underlying output growth, employment and inflationary pressures.
Strong PMI readings will help guide expectations as to when the Fed could hike interest rates again, as will the publication of the FOMC minutes. The FOMC has previously indicated that it is actively mulling a December rate hike but markets currently assign less than a 10% probability to such a hike.
Other notable US economic data releases include October durable goods orders, consumer sentiment and existing home sales.
Has the euro-boom persisted into Q4?
In Europe, the surprising strength of the eurozone PMI data has been gradually confirmed by official data, and flash November PMI numbers will provide a reliable guide to whether the recent growth surge has persisted into the fourth quarter. The October PMI reading pointed to another quarter of 0.6-0.7% growth.
UK Budget and Brexit
The UK Chancellor of the Exchequer delivers the Autumn Budget the day after government borrowing numbers for October are published. The Chancellor has come under increasing pressure to deliver a popular ‘big and bold’ budget that includes increased spending as a means of reviving spirits in the struggling and divided government.
Brexit will no doubt meanwhile continue to provide a near-constant news flow of chatter and speculation in Europe. The week sees EU leaders convene to assess the progress made with the UK’s divorce negotiations and prepare the ground for December’s crucial summit. The UK waits to see if Brussels deems enough progress has been made on the terms of the divorce to allow discussions to move on to the all-important future trade relationship. The size of the divorce bill remains a key sticking point.
The ONS will also have another stab at estimating third quarter GDP, with no signs that the current estimate of 0.4% will be revised.
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