GLOBAL WEEK AHEAD: Eyes on Eurozone Prelim CPIs

The main focus for the upcoming week will be euro-area preliminary December inflation prints. Headline annualised inflation is largely expected to cool, with tail risks of Italy and France going against the trend.

MONDAY

Final Eurozone Manufacturing PMIs: French, German and Eurozone final PMIs should largely confirm flash estimates, implying modest improvements to signal shallower contractions for the eurozone in December. Manufacturing PMIs are due Monday, and Services on Wednesday. The December PMIs, albeit improved, remained in contractive territory, extending the downturn into the sixth consecutive month. First and final prints are due for Spain and Italy, for which consensus is expecting marginally worse PMIs for Spain, yet Services remaining above the crucial break-even point of 50. Italy is expected to see both manufacturing and services hold at November levels, which signals soft downturns.

TUESDAY

Germany Labour Report: The German December labour data is expected to continue to show unemployment unchanged at 5.6% and a modest 15K uptick in unemployed persons. This is largely in line with levels since September. The German labour market remains very tight, a concern for the ECB as wage pressures grow. The German Statistic Bureau posted a +2.3% y/y rise in nominal earnings in Q3, implying a -5.7% y/y fall in real earnings. Q4 data will not be posted until well into Q1 next year and will uncover the extent to which inflation is becoming entrenched in wage negotiations.

Germany CPI: Following the morning slew of state data, German inflation is anticipated to cool by 0.9pp to +9.1% y/y in the national print, and by 0.8pp to +10.5% y/y in the harmonised reading. Month-on-month CPI is expected to be deflationary, at -0.7% m/m following -0.5% m/m in the November national data.

WEDNESDAY

Switzerland CPI: Swiss inflation is set to cool marginally by -0.1% m/m in December, leaving the annualised CPI rate steady at the October level of +3.0% y/y. This is 0.5pp softer than the August peak. In December the SNB raised its policy rate to 1% from 0.5% and slightly boosted its medium-term inflation forecast, signalling also that it could hike more if necessary and remains willing to use the exchange rate as necessary to counter price pressures. Average inflation is expected to reach 2.9% this year.

France CPI / Consumer Sentiment: French HICP is seen little changed from November, at +0.4% m/m again and edging up by 0.1pp to +7.2% y/y -- a fresh euro-era peak. Focus will be on whether fiscal support manages to bring down energy costs, which recorded only a marginal deceleration on the year in November.

Consumer confidence will likely edge up another point to 84, distancing further from the September dip to 80, which was only one point above the euro-debt crisis of 2013 low.

US ISM Manufacturing PMI: The ISM manufacturing PMI is projected to weaken by half a point to 48.5 in December, weakening for the fourth consecutive month and signalling a second month of contraction for the sector.

THURSDAY

Eurozone PPI: Factory-gate inflation is set to continue to slow across the bloc, albeit at a slightly softer pace of -0.5% m/m in November after the -2.9% m/m decrease in PPI in October. This should see PPI soften to +27.5% y/y, firmly below the August peak of +43.4% y/y.

Italy CPI: Italian inflation is hoping to see some relief in December, after holding steady at the alarming +12.6% y/y (HICP) and +11.8% y/y (CPI) pace in November. This CPI level is a 37-year high, boosted by a continued acceleration in energy and food prices.

FRIDAY

Germany Industrial Orders/Retail Sales: November data will likely paint a negative picture for German demand across both factory orders and the retail sector Retail sales should see some improvement, to expand by around +1.5% m/m, whilst remaining firmly contractionary at -5.9% y/y as the high cost of living and looming recessionary fears eat into consumer spending appetite. Factory orders are projected to contract by -0.5% m/m and -5.9% y/y, worsening into November as demand subsides.

Eurozone CPI: Eurozone CPI is seen softening for a second month running, cooling to +9.6% y/y in the December flash due next Friday.

Yet all attention will be on the core print, and whether it shifts from +5.0% y/y. The latest Spanish core jump provides evidence for an upside surprise. At the December meeting the ECB opted for a 50bp hike combined with significantly hawkish messaging. The ECB made clear that the slowdown to 50bp was not a pivot and that policy rates would be pushed beyond the neutral rate in order to dampen inflation.

Eurozone Sentiment: In line with individual national data, economic sentiment is expected to improve in December for the bloc, as outlooks continue to stabilise. Economic confidence should tick up to 94.5, from 93.7 in November.

US Nonfarm Payrolls: No major surprises are expected in the December non-farm payrolls data, with the unemployment rate to hold steady at 3.7%, only 0.2pp above the July/September low. Payrolls are expected to expand by around 200k, slowing from 263k recorded in November. The US labour market is showing signs of nearing peak tightness and the December forecast would imply the softest payrolls since the Omicron wave which saw a contraction.

US ISM Services PMI: The ISM services index should remain firmly in expansive territory in December, despite the expected 1.5-point moderation to 55.0 anticipated. Services have remained strongly expansive despite contractive manufacturing PMI data according to ISM, underpinned by a prolonged post-Covid re-opening boost.

Source: MNI/Bloomberg

Date	GMT/Local	Impact	Flag	Country	Event
02/01/2023	0815/0915	**		ES	IHS Markit Manufacturing PMI (f)
02/01/2023	0845/0945	**		IT	IHS Markit Manufacturing PMI (f)
02/01/2023	0850/0950	**		FR	IHS Markit Manufacturing PMI (f)
02/01/2023	0855/0955	**		DE	IHS Markit Manufacturing PMI (f)
02/01/2023	0900/1000	**		EU	IHS Markit Manufacturing PMI (f)
03/01/2023	2200/0900	**		AU	IHS Markit Manufacturing PMI (f)
03/01/2023	0145/0945	**		CN	IHS Markit Final China Manufacturing PMI
03/01/2023	0700/0200	*		TR	Turkey CPI
03/01/2023	0855/0955	**		DE	Unemployment
03/01/2023	0900/1000	***		DE	Bavaria CPI
03/01/2023	0930/0930	**		UK	IHS Markit/CIPS Manufacturing PMI (Final)
03/01/2023	1000/1100	***		DE	Saxony CPI
03/01/2023	1300/1400	***		DE	HICP (p)
03/01/2023	1445/0945	***		US	IHS Markit Manufacturing Index (final)
03/01/2023	1500/1000	*		US	Construction Spending
03/01/2023	1630/1130	*		US	US Treasury Auction Result for 26 Week Bill
03/01/2023	1630/1130	*		US	US Treasury Auction Result for 13 Week Bill
04/01/2023	0001/0001	*		UK	BRC Monthly Shop Price Index
04/01/2023	0030/0930	**		JP	IHS Markit Final Japan Manufacturing PMI
04/01/2023	0730/0830	***		CH	CPI
04/01/2023	0745/0845	**		FR	Consumer Sentiment
04/01/2023	0745/0845	***		FR	HICP (p)
04/01/2023	0815/0915	**		ES	IHS Markit Services PMI (f)
04/01/2023	0845/0945	**		IT	IHS Markit Services PMI (f)
04/01/2023	0850/0950	**		FR	IHS Markit Services PMI (f)
04/01/2023	0855/0955	**		DE	IHS Markit Services PMI (f)
04/01/2023	0900/1000	**		EU	IHS Markit Services PMI (f)
04/01/2023	0930/0930	**		UK	BOE M4
04/01/2023	0930/0930	**		UK	BOE Lending to Individuals
04/01/2023	1200/0700	**		US	MBA Weekly Applications Index
04/01/2023	-	***		US	Domestic-Made Vehicle Sales
04/01/2023	1355/0855	**		US	Redbook Retail Sales Index
04/01/2023	1500/1000	***		US	ISM Manufacturing Index
04/01/2023	1500/1000	**		US	JOLTS jobs opening level
04/01/2023	1500/1000	**		US	JOLTS quits Rate
05/01/2023	2200/0900	*		AU	IHS Markit Final Australia Services PMI
05/01/2023	0145/0945	**		CN	IHS Markit Final China Services PMI
05/01/2023	0700/0800	**		DE	Trade Balance
05/01/2023	0830/0930	**		EU	IHS Markit Final Eurozone Construction PMI
05/01/2023	0930/0930	**		UK	IHS Markit/CIPS Services PMI (Final)
05/01/2023	0930/0930			UK	BOE Dec DMP Survey
05/01/2023	1000/1000	**		UK	Gilt Outright Auction Result
05/01/2023	1000/1100	***		IT	HICP (p)
05/01/2023	1000/1100	**		EU	PPI
05/01/2023	1315/0815	***		US	ADP Employment Report
05/01/2023	1330/0830	**		US	Jobless Claims
05/01/2023	1330/0830	**		US	Trade Balance
05/01/2023	1420/0920			US	Atlanta Fed President Raphael Bostic
05/01/2023	1445/0945	***		US	IHS Markit Services Index (final)
05/01/2023	1530/1030	**		US	Natural Gas Stocks
05/01/2023	1600/1100	**		US	DOE weekly crude oil stocks
05/01/2023	1820/1320			US	St. Louis Fed's James Bullard
06/01/2023	0030/0930	**		JP	IHS Markit Final Japan Services PMI
06/01/2023	0700/0800	**		DE	Manufacturing Orders
06/01/2023	0730/0830	**		CH	retail sales
06/01/2023	0745/0845	**		FR	Consumer Spending
06/01/2023	0930/0930	**		UK	IHS Markit/CIPS Construction PMI
06/01/2023	1000/1100	**		EU	EZ Economic Sentiment Indicator
06/01/2023	1000/1100	***		EU	HICP (p)
06/01/2023	1000/1100	**		EU	retail sales
06/01/2023	1330/0830	***		CA	Labour Force Survey
06/01/2023	1330/0830	**		US	WASDE Weekly Import/Export
06/01/2023	1330/0830	***		US	Employment Report
06/01/2023	1500/1000	*		CA	Ivey PMI
06/01/2023	1500/1000	***		US	ISM Non-Manufacturing Index
06/01/2023	1500/1000	**		US	factory new orders
06/01/2023	1615/1115			US	Atlanta Fed President Raphael Bostic
06/01/2023	1615/1115			US	Fed Governor Lisa Cook
06/01/2023	1715/1215			US	Richmond Fed President Tom Barkin
06/01/2023	1730/1230			US	Kansas City Fed's Esther George
06/01/2023	2030/1530			US	Atlanta Fed President Raphael Bostic