The coming data-heavy week presents a broad mix of indicators for leading economies. Monthly activity surveys for the US, UK and China are out on Monday and Wednesday, eurozone inflation and growth data are published on Wednesday and Friday respectively, then there are interest rate announcements from the European Central Bank and Bank of England on Wednesday and Thursday with US non-farm payrolls available on Friday.
Little action is expected from the ECB or BoE meetings this week, UK inflation turned negative in April making the chance of a near term rate rise even less likely.
Ranko Berich, head of market analysis at Monex Europe sums up the situation at the ECB: “The eurozone economy is undoubtedly beginning to turn a corner, but the ECB has been utterly adamant that no amount of good short-term data will shake its commitment to completing its QE programme. Extremely accommodative monetary policy is here to stay for the foreseeable future.”
Monthly manufacturing activity for May, measured by the purchasing managers’ index is out for the UK on Monday. Election uncertainty slowed activity in April but the sector continued to expand, while improvement is expected for May with the index moving to 52.8.
The US equivalent, from the Institute for Supply Management, has been hit hard since the end of last year. Falling investment in the energy sector and sluggish export growth have weighed on certain manufacturing sectors, pushing the index from 57.9 in October down to 51.5 in April. The May figure is expected to rebound marginally to 52.
UK service sector activity has seen constant expansion since the beginning to 2013; the April reading of 59.5 remained strong and well above the 50 level that indicates growth. This trend is expected to continue in May albeit at a slightly reduced rate of 59.1. US services measured by the ISM non-manufacturing PMI has followed a similar path of strong growth, averaging 57.2 in the past six months and a reading of 57.8 in April. May’s figure is expected to remain on trend with a reading of 57.0.
Eurozone prices edged out of deflation territory in April as downward pressure on food and energy prices subsided, leaving prices flat over the year. Oil prices have rebounded by about a third from the lows seen at the start of the year and as a result overall prices are expected to rise again in May, with analysts expecting 0.2 per cent annual growth when figures are released on Tuesday.
The second estimate of eurozone GDP is released on Friday. While analysts do not expect the 0.4 per cent quarter-on-quarter growth figure for the first quarter to be revised, the additional detail that becomes available is expected to reveal a strong boost to consumer spending as a result of lower energy costs.
US non-farm payrolls out on Friday are expected to remain firm, with a 223,000 gain in May, in line with April’s figure. The unemployment rate is expected to remain at 5.4 per cent.