Wednesday March 15, 2017 March 15, 2017 Dutch Vote; Fed Rate Decision; U.K. Unemployment By Geoff King and Colin Simpson What to Watch: The Netherlands votes in a general election that’s seen as a bellwether for the rise of populism in western Europe. The likely outcome is a four- or five-party coalition (see chart below). Follow the from 8 p.m, when the TOPLive blog polls close. U.S. policy makers are projected to raise their Federal Reserve by 25 basis points to a range of 0.75 percent to 1 percent on benchmark interest rate signs inflation and unemployment are in line with their goals. Follow the at TOPLive blog 6 p.m. and Fed Chair Janet Yellen's news conference at 6:30 p.m. European Central Bank Executive Board member speaks in Frankfurt, 9:30 a.m. Peter Praet Economics: Economists surveyed by Bloomberg expect the U.K. unemployment to have remained at 4.8 percent in the three months to January, at 9:30 a.m. Czech rate and for January at 8 a.m., euro-area fourth quarter retail sales industrial output and February at 10 a.m. and Iceland's is at 8:55 a. employment inflation rate decision m. In the U.S. there is weekly at 11 a.m., March MBA mortgage applications Empire and February and at 12:30 p.m. State manufacturing CPI retail sales Government: Brexit Secretary is questioned by the U.K. House of David Davis Commons Brexit Committee. The timetable for triggering the two-year process of departure from the EU is likely to be a major topic, from 9:15 a.m. Markets: whipsawed on production and stockpiles reports, while Crude oil Asian followed U.S. and European equities lower before an expected interest-rate hike stocks by Federal Reserve policy makers. (All times local for London.) Nicola Sturgeon @NicolaSturgeon In addition, I was elected as FM on a clear manifesto commitment re #scotr . The PM is not yet elected by ef anyone. Details Quote of The Day "The main reason for the krona gaining strength is the tourism boom. I think lifting capital may be a way controls to at least stop this trend." — Iceland's finance minister, Benedikt Johannesson, would like to see the central bank cut interest rates at today's meeting Commentary in This Issue The U.K. market labor probably created enough jobs to keep the headline unemployment rate at its historically low level: Dan Hanson. The January increase in euro-area industrial production was mostly the of the sector result recouping losses from the previous month: David Powell. Almost three months into 2017 the German economy to appears be growing at least as fast as the previous quarter: Maxime . Sbaihi Tweet of the Day U.K. Jobs Wilders's Party Slumps in Final Dutch Polls The prospect of Geert Wilders emerging as the winner of today’s Dutch election was thrown into doubt by two polls on the eve of voting that showed his anti-Islam, anti-European Union Freedom Party slumping to fifth place in one survey and third in another. The final poll from I&O Research showed Wilders’s party on 16 seats in the 150-member lower house of parliament, down four seats from a survey released just the day before. The last Ipsos survey before the election gave the Freedom Party 20 seats, a drop of three from last week. Both polls showed Prime Minister Mark Rutte’s Liberals gaining three seats — to 27 and 29 respectively. Read the full story on the web — Eddie Buckle
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Wednesday
March 15, 2017
March 15, 2017
Dutch Vote; Fed Rate Decision; U.K. UnemploymentBy Geoff King and Colin Simpson
What to Watch: The Netherlands votes in a general election that’s seen as a bellwether for the rise of populism in western Europe. The likely outcome is a four- or five-party coalition (see chart below). Follow the from 8 p.m, when the TOPLive blogpolls close. U.S. policy makers are projected to raise their Federal Reserve
by 25 basis points to a range of 0.75 percent to 1 percent on benchmark interest ratesigns inflation and unemployment are in line with their goals. Follow the at TOPLive blog6 p.m. and Fed Chair Janet Yellen's news conference at 6:30 p.m. European Central Bank Executive Board member speaks in Frankfurt, 9:30 a.m.Peter Praet
Economics: Economists surveyed by Bloomberg expect the U.K. unemployment to have remained at 4.8 percent in the three months to January, at 9:30 a.m. Czech rate
and for January at 8 a.m., euro-area fourth quarter retail sales industrial output and February at 10 a.m. and Iceland's is at 8:55 a.employment inflation rate decision
m. In the U.S. there is weekly at 11 a.m., March MBA mortgage applications Empire and February and at 12:30 p.m.State manufacturing CPI retail sales
Government: Brexit Secretary is questioned by the U.K. House of David DavisCommons Brexit Committee. The timetable for triggering the two-year process of departure from the EU is likely to be a major topic, from 9:15 a.m.
Markets: whipsawed on production and stockpiles reports, while Crude oil Asian followed U.S. and European equities lower before an expected interest-rate hike stocks
by Federal Reserve policy makers.
(All times local for London.)
Nicola Sturgeon@NicolaSturgeon
In addition, I was elected as FM on a clear manifesto commitment re #scotr
. The PM is not yet elected by efanyone.Details
Quote of The Day
"The main reason for the krona gaining strength is the tourism boom. I think lifting capital may be a way controls to at least stop this trend."
— Iceland's finance minister, Benedikt
Johannesson, would like to see the central
bank cut interest rates at today's meeting
Commentary in This Issue
The U.K. market laborprobably created enough jobs to keep the headline unemployment rate at its historically low level: Dan Hanson.
The January increase in euro-area industrial production was mostly the of the sector result recouping losses from the previous month: David Powell.
Almost three months into 2017 the German economy to appearsbe growing at least as fast as the previous quarter: Maxime
.Sbaihi
Tweet of the Day
U.K. Jobs
Wilders's Party Slumps in Final Dutch Polls
The prospect of Geert Wilders emerging as the winner of today’s Dutch election was thrown into doubt by two polls on the eve of voting that showed his anti-Islam, anti-European Union Freedom Party slumping to fifth place in one survey and third in another. The final poll from I&O Research showed Wilders’s party on 16 seats in the 150-member lower house of parliament, down four seats from a survey released just the day before. The last Ipsos survey before the election gave the Freedom Party 20 seats, a drop of three from last week. Both polls showed Prime Minister Mark Rutte’s Liberals gaining three seats — to 27 and 29 respectively. Read the full story on the .web
— Eddie Buckle
Economics Europe 2 March 15, 2017
U.K. Jobs
Healthy Labor Market Unlikely to Lift Pay GrowthBy Dan Hanson, Bloomberg Intelligence economistThe labor market probably created enough jobs to keep the headline unemployment rate at its historically low level in the three months to January. However, wage gains are likely to remain muted. Slower growth over the coming year could well cause unemployment to increase and push back the point at which the labor market tightens sufficiently to stoke domestic cost pressures. All in all, the is unlikely to see Bank of Englandany case for altering course until the U.K. has left the European Union in 2019.
Headline unemployment rate to remain unchanged at 4.8 percent after an acceleration in the number of jobs created in the three months to January.
Both total and regular whole economy pay growth to slip back to 2.5 percent.
Bloomberg Intelligence’s indicator of real-time employment (BIRTE) in the UK, which draws on a number of surveys, has remained remarkably stable in recent months while official data has wobbled and temporarily turned negative. BI Economics expects the official change in employment in the three months to January to show a further 95,000 jobs were added, which would be enough to leave the unemployment rate at 4.8 percent. As ever, any movement in the jobless rate will also depend on changes in participation.
Despite being historically low, the unemployment rate has failed to spark faster wage growth. Serial over optimism on pay from official forecasters in the U.K. has recently led to a wave of adjustments to the equilibrium rate of unemployment. The Bank of England lowered its view of the rate to 4.5 percent from around 5 percent, while the Office for Budget
What to Expect:
Read this analysis with additional live charts on the Bloomberg .terminal
Responsibility moved to 5 percent from 5.2 percent. BI Economics’ forecast, released in February, is consistent with an equilibrium rate of about 5 percent. But with wage growth experiencing so many false dawns it’s possible this figure is slightly lower.
The latest set of labor market statistics are likely to show yet another misfire for pay growth. Both whole economy regular
wage growth and the measure includingbonuses will probably drop back to 2.5 percent in January. What’s more, with headwinds this year from the collapse in sterling and heightened political uncertainty, demand growth probably won’t prove strong enough to push unemployment lower. In fact, BI Economics expects the jobless rate to edge up in the second half of the year as companies begin adjusting to the softer outlook for activity. Still, there probably won’t be much sign of that happening in today's data release — labor demand tends to take time to adjust to a change in the outlook.
It’s worth bearing in mind that the Office
for National Statistics will take the claimant count out of this release because of concerns about seasonal adjustment with some of the data. With no official gauge of the number of people claiming unemployment benefits, the most timely measure of labor demand will be the vacancies data.
Overall, there is unlikely to be enough in the labor market release to change the thinking at the Bank of England. BI Economics expects the central bank’s next move be a rate increase, but that currently looks some way off. The BOE is unlikely to change course until it sees evidence that unit labor costs — wages adjusted for productivity — are running at a pace which is consistent with a sustainable return of inflation to target. That rate is probably in the region of 2.5-2.75 percent and looks unlikely to show up in the data until after the U.K. has left the EU in mid-2019. In the meantime, the Monetary Policy Committee is likely to keep policy on hold while the economy weathers a tough two-year Brexit negotiation process with the EU.
Euro-Area Industry
Pay Growth Probably Lost Steam in January
Economics Europe 3 March 15, 2017
Euro-Area Industry
Industry Heals as ECB's QE Greases RecoveryBy David Powell, Bloomberg Intelligence economistThe increase in euro-area industrial production in January was mostly the result of the sector recouping losses from the previous month — not a sharp improvement in the sector’s fortunes. Nonetheless, industry is poised to add to GDP growth in the first quarter. In addition, it’s recovering from last year’s lull and that’ll probably continue as the
provides European Central Bank support with its asset purchases even ifthe outsized contribution from Italy doesn’tpersist.
Industrial production rose 0.9 percent month over month in January. That was close to market expectations of 1.3 percent after taking into account that the figure for December was revised to minus-1.2 percent from minus-1.6 percent. The details take some of the shine off the headline. The increase was primarily driven by a surge in the production of capital goods of 2.8 percent that merely made up for a decline of the same magnitude in the previous month. That category contributed 0.8 percentage point to the headline. Energy, which often has little to do with the underlying state of the economy, added another 0.3 percentage point. The categories of durable consumer goods, non-durable consumer goods and intermediate goods were all responsible for small drags.
The expansion leaves industry poised to contribute to GDP growth in the first quarter. The index now stands 0.6 percent above the average for October to December of 105.8.
The longer-term trend is still recovering from the mid-year slowdown registered in 2016. The three-month average of theyear-over-year reading, which smoothsthe volatile time series, stood at 1.9percent in January. That’s well above the print of 0.4 percent from July, even though it declined slightly from 2.1 percent in December.
The country breakdown reveals the
View a live version of this chart on the Bloomberg .terminal
Read this analysis with additional charts on the Bloomberg .terminal
largest contribution from the bloc’s four largest economies to that smoothed figure for the monetary union as a whole came from Italy. It contributed 0.5 percentage point. That compares with 0.3 percentage point from Germany, 0.2 percentage point from Spain and 0.1 percentage point from France. Italian industry experienced a
revival in 2016, expanding in three out of four quarters with especially robust performances in the third (1.3 percent) and fourth (1 percent). Posting a similar rate of growth in the first quarter will be hard, especially after having experienced a weak start to the year, but survey data suggests it can’t be ruled out.
German Sentiment
Industry Poised to Contribute to First Quarter GDP Growth
Industrial Production Trend Recovers
Economics Europe 4 March 15, 2017
German Sentiment
ZEW Signals Growth Momentum Remains Intact in the First QuarterBy Maxime Sbaihi, Bloomberg Intelligence economistThe German survey rebounded in ZEWMarch after a minor setback in February. Almost three months into 2017 the German economy appears to be growing at least as fast as the previous quarter. The details of the survey show that the German financial world seems to be taking the economic and political risk of its major partners in its stride.
The ZEW survey erased in March the losses seen in February. The current situation component rose to 77.3 in March, after falling slightly to 76.4 in February. As the top chart shows, the expectations component also bounced back over the month. Both readings are better than the ones of the last month, but still slightly below the median forecast ofeconomists surveyed by Bloomberg News.
The release provides good reasons to be optimistic about the German economy. The level of the current assessment component remains high by historical standards. The first quarter average now stands at 77, way above the 60.6 of the previous quarter. The ZEW current situation belongs to the German coincident indicators for GDP growth — though its track record is less strong than the survey, which is far Ifomore representative of the economy.
Bloomberg’s indicator of real-time activity (BIRTA) for Germany — which includes components from both surveys — signals that the strong underlying momentum of the fourth quarter is being carried into the first months of 2017. This helps support BI Economics’ forecast that the German economy will expand by 0.4 percent again over the first quarter of the year.
There are plenty of things for the 207 financial experts surveyed by the ZEW
institute to worry about. The details of the
View a live version of this chart on the Bloomberg .terminal
Read this analysis with additional live charts on the Bloomberg .terminal
survey bring interesting information about their world view. Expectations of
economic growth actually improved for all major partners in the lower chart, with the
noteworthy exception of the U.K. and the
U.S. Oddly enough, the much-discussed — and their Frexit French elections
potential — don’t seem to be spooking them.
Economic Calendar
ZEW Survey Looking Better in March
ZEW Expectations of Growth in Selected Economies
Economics Europe 5 March 15, 2017
Economic Calendar
Upcoming Releases
TIME PLACE EVENT SURVEY PRIOR
07:00 Turkey Unemployment Rate 12.40% 12.10%
07:45 France CPI EU Harmonized MoM 0.10% 0.10%
07:45 France CPI EU Harmonized YoY 1.40% 1.40%
07:45 France CPI MoM 0.10% 0.10%
07:45 France CPI YoY 1.20% 1.20%
08:00 Czech Repub. Retail Sales YoY 7.50% 3.70%
08:00 Czech Repub. Industrial Output YoY 7.90% 2.70%
08:55 Iceland 7-Day Term Deposit Rate — 5.00%
09:00 Italy Retail Sales MoM 0.20% -0.50%
09:00 Italy Retail Sales YoY 0.80% -0.20%
09:30 U.K. Claimant Count Rate — 2.10%
09:30 U.K. Jobless Claims Change — -42.4k
09:30 U.K. ILO Unemployment Rate 3Mths 4.80% 4.80%
09:30 U.K. Employment Change 3M/3M 87k 37k
10:00 Euro Area Employment QoQ — 0.20%
10:00 Euro Area Employment YoY — 1.20%
10:00 Italy CPI EU Harmonized YoY 1.60% 1.60%
11:00 Ireland CPI EU Harmonized YoY 0.40% 0.20%
11:00 Ireland CPI YoY — 0.30%
11:00 U.S. MBA Mortgage Applications — 3.30%
12:30 U.S. Empire Manufacturing 15 18.7
12:30 U.S. CPI MoM 0.00% 0.60%
14:00 Belgium Trade Balance — 67.2m
18:00 U.S. FOMC Rate Decision (Upper Bound) 1.00% 0.75%
18:00 U.S. FOMC Rate Decision (Lower Bound) 0.75% 0.50%Source: Bloomberg. Survey figures updated at 5:10 London time.
Click on the to see the range of forecasts on the Bloomberg terminal.highlighted releases
Taxing Robots: In a recent interview Bill Gates argued that if workers humanhave their income taxed and then a robot comes in to do the same thing, it seems logical to think that we would tax the robot at a similar level. Bruegel Affiliate Fellow reviews what other Silvia Merlereconomists think about the idea.
: The EU is Overhauling Europecelebrating the 60th anniversary of its founding treaty, the Treaty of Rome, which established the European Economic Community. While there is much to celebrate, says Dani Rodrik, Professor of International Political Economy at Harvard University’s John
the F. Kennedy School of Government,union is mired in an existential . crisis
More Attractive: Nicola Sturgeon had no choice but to announce a second Scottish — Brexit is a huge referendumeconomic and political change, and she would be neglecting her duty to the citizens of Scotland not to explore ways she could avoid a hard Brexit fate for her people, says Oxford UniversityProfessor of Economic Policy Simon
. This makes the case for Wren-Lewisindependence much stronger now than in 2014, as hopes for a brighter future outside the U.K. have changed from patriotic wishful thinking to almost a certainty if they can remain in the single market.
What We're Reading
Bloomberg Briefs: Economics Europe
Bloomberg Brief Managing Editor
Paul Smith
Economics Editors
Geoff King
James Batty
James Crombie
European Economics Associate
Niraj Shah
Global Head of Economics
Michael McDonough
Chief EMEA Economist
Jamie Murray
Chief Euro-Area Economist
David Powell
Euro-Area Economist
Maxime Sbaihi
U.K. Economist
Dan Hanson
Marketing & Partnership Director
Courtney Martens
@bloomberg.netcmartens3
+1-212-617-2447
Advertising
Lucy Rosen
+1-212-617-6759
Reprints & Permissions
Lori Husted
+1-717-505-9701 x2204
Economics Terminal Sales
Joe Woodbury
+44 20 3525 2384
Interested in learning more about
the Bloomberg terminal? Request a
free demo .here
© 2017 Bloomberg LP.
All rights reserved. This newsletter
and its contents may not be
forwarded or redistributed without
the prior consent of Bloomberg.
Please contact our reprints group
listed left for more information.
Related Documents
