By Hans Bentzien
FRANKFURT (Dow Jones) — The German economy ended the past year much worse than initially assumed – namely with a decline in gross domestic product (GDP). Now that the new year has begun, analysts are eagerly waiting to see if the industry has heard the shot. The data on incoming orders, sales and production this week will show. The analyst forecasts look undramatic. The highlight from an economic point of view will be the US labor market report for February on Friday.
In view of the high order backlog, the order intake of German industry was a footnote in the economic analysis for a long time – in the meantime it is attracting more attention again. The order backlog has recently fallen, even if nobody knows what that means: According to surveys, companies are rather cautious in their assessment, while the Federal Statistical Office is trying to calm down: Compared to the time before Corona, the plus is still 30 percent.
German incoming orders decrease – production increases
For January, the economists surveyed expect a month-on-month decline of 1.0 percent, after orders had previously risen by 3.2 percent, mainly due to many large orders. With regard to production in January, the figures for industrial sales are of interest, which the Federal Statistical Office published together with the incoming orders on Tuesday (8:00 a.m.).
Production in Germany’s manufacturing sector (Wednesday, 8:00 a.m.) is likely to have picked up in January. Economists expect an increase of 1.5 percent. The analysts at Commerzbank point out that, according to their calculations, car production has increased on a monthly basis. Other figures from Germany are those for service sales in December (Tuesday, 8:00 a.m.) and the Sentix economic index (Monday, 10:30 a.m.). Other European data are euro area Q4 GDP (Wednesday 11am) and UK January GDP (Friday 8am).
US job growth slows significantly – unemployment unchanged
So nothing big, the music is playing this week in the US, where the jobs report for February will be released on Friday. Analysts expect employment growth to have eased to 265k after February’s stronger-than-expected rise of 517k. The unemployment rate is expected to remain at 3.4 percent and hourly wages are expected to increase by 0.4 (0.3) percent per month and by 4.4 (4.4) percent annually.
The expectations of market participants for the interest rate of the US central bank will certainly be influenced more by these figures than by the results of the Fed economic survey (Beige Book), which will be published on Wednesday (8 p.m.).
BoJ changes nothing – waiting for Ueda
Other central bank-related dates include the interest rate decisions of the Reserve Bank of Australia (Tuesday, 4.30 a.m.), the Bank of Canada (Wednesday, 4.30 p.m.) and the Bank of Japan (BoJ). BoJ Governor Haruhiko Kuroda is not expected to announce any significant changes at his latest meeting. BoJ likely to confirm negative deposit rate and 10-year government bond yield target.
Kuroda’s designated successor, Kazuo Ueda, will take office on April 9. The first meeting chaired by Ueda will take place on April 28th. Overall, Ueda has so far presented itself as a guarantee of continuity – at least for the beginning. But there is speculation that Ueda could give up yield curve control very soon, perhaps as early as April monetary policy will in future only target short-term interest rates.
(Assistance: Andreas Plecko)
Contact the author: [email protected]
DJG/hab/apo
(END) Dow Jones Newswires
March 03, 2023 08:45 ET (13:45 GMT)