18/05/2015- Last week’s markets and economic data expected in the week ahead
Economic data released last week was mixed. Domestic data was strong – unemployment over the January to March period fell to its lowest level for 7 years, whilst the proportion of the working age population in employment posted another fresh record high; and industrial production in March posted its strongest performance for 6 months. Away from raw data, in its quarterly inflation report the Bank of England cut its economic growth forecasts for this year (from 2.9% to 2.5%) and next year (from 2.9% to 2.6%), due to a more pessimistic outlook for growth in productivity and labour supply, whilst it is still seen as more likely than not that inflation will fall into negative territory over the coming months.
Elsewhere, the first estimate of first quarter GDP growth in the Eurozone came in at 0.4% quarter-on-quarter, slightly ahead of expectations. US retail sales were flat in April, slightly below expectations, whilst industrial production fell for a fifth consecutive month. Chinese retail sales in April rose by 10% year-on-year (remarkably, this is the lowest growth rate for 9 years), whilst industrial production recovered slightly from recent weakness.
Stock markets posted a mixed week of performance. The FTSE 100 index fell by 1.23% over the course of the week; the S&P 500 index rose by 0.31%; the Dax index fell by 2.24%; whilst the Nikkei index rose by 2.29%. In sovereign bond markets, the UK 10-year Gilt yield is currently at 1.98%, the US 10-year Treasury yield is at 2.16% and the German 10-year Bund yield is at 0.63% after much recent movement.
Economic data due for release this week is shown below. Inflation figures in the UK and the US, and Japanese GDP growth, are likely to be the highlights.
UK – Inflation
Germany – ZEW economic sentiment survey
Japan – Q1 GDP growth (1st est.)
UK – Retail sales
Eurozone – Manufacturing PMI
Eurozone – Services PMI
Germany – IFO business climate survey
US – Inflation