Macroeconomics: The Day Ahead for 13 February

A busier day for statistics has UK labour data and US CPI as its focal points, with Japan’s PPI and French Unemployment to digest, ahead of the German ZEW and US NFIB Small Business Optimism surveys. The central bank speaker schedule is very limited, but OPEC publishes its monthly Oil Market Report and the IEA holds its 50th anniversary Ministerial Meeting, while a busy run of US corporate earnings has AIG, AirbnB, Coca-Cola, GlobalFoundries, Molson Coors and Zoetis among those likely to make headlines. It will also be a busy day for govt bond supply in Europe sees auctions in Italy (3, 7 & 20yr), UK (I-L 10-yr) and Germany (5-yr).

** U.K. – Dec/Jan Unemployment & Wages **

While there remains a lot of doubt about the reliability of the Labour Force Survey data, given that response rates remain low despite the survey group expansion, this was an overall robust labour market report, with the Unemployment Rate dipping 0.1 ppt to 3.8%, LFS Employment up 72K and Vacancies little changed at 932K; HMRC Payrolls also posted a gain of 48K, after falling modestly in the prior two months. But it will be the smaller than expected, though still substantial fall in Average Weekly Earnings to 5.8% y/y vs. forecast 5.6% and prior 6.7%, and ex-Bonus to 6.2% vs. forecast 6.0%, which further vindicates the BoE’s continued pushback on rate cut expectations, attention now turns to tomorrow’s CPI.

** Germany – Feb ZEW survey **

The ZEW survey is expected to see a modest rise in Expectations (17.5 from 15.2), boosted by the rise in the Dax with which it is closely correlated. But a run of further grim economic news is likely to weigh on the Current Situation index (-79.0 vs. -77.3).

** U.S.A. – Jan CPI, NFIB Small Business Optimism **

CPI is set to increase in m/m terms at 0.2% headline and core at 0.3%, i.e. around recent monthly trends, but thanks to benign base effects, that would take headline y/y down to 2.9% from 3.4%, though core only down to 3.7% from 3.9%. In the detail, Used Auto Prices should be a key contributor to the headline fall, while easing housing rental costs (OER) will ease pressure on core, though overall Services prices will still be somewhat sticky. NFIB Small Business Optimism is seen edging up to 92.1 from 91.9, with the already published Employment components showing Plans to Hire (14 vs. prior 16, lowest since May 2020) and Position Not Able To Fill (39 vs. 40), though Net Compensation rose (39 vs. 36). Much will depend on whether ‘Expect Better Economy’ sustains December’s rebound to -36 from -42, which should be the case given the run of economic data.