During the week ahead the market is likely to look towards a number of key market themes and events which have the potential to indicate financial market moves.
The United States PPI release is the main event of the week this week. A large data supply from the US economy is also on cards alongside trade and Jobs numbers from the United Kingdom economy.
The Producer Price Index number of expected to rise this week, which is curious considering that CPI in the US fell sharply last week and caused a big market reaction.
PPI in November of 2022, the same as an upwardly revised 0.3% increase in October and above market forecasts of 0.2%. Cost of services went up 0.4%, the biggest gain in three months, led by securities brokerage, dealing, investment advice, and related services, which jumped 11.3%.
Cost of goods edged up 0.1%, led by a 38.1% surge in prices for fresh and dry vegetables while gasoline prices dropped 6%. Compared to the same month in 2021, producer prices were up 7.4%, the smallest increase since May last year, but higher than expectations of 7.2%.
This inflation data release has the ability to move markets again this week.
The unemployment rate is expected to stay the same last month after the number on the UK edged higher to 3.7% in the three months to October of 2022 from 3.6% in the previous period, matching market forecasts.
The last number showed that the inactivity rate decreased by 0.2 percentage points to 21.5%, driven by those that were considered retired but are now looking for work. On the wage front, both total pay (including bonuses) and regular pay (excluding bonuses) increased 6.1%.
Last month the number of people in work in the United Kingdom rose by twenty-seven thousand in the three months to October, beating market estimates of a seventeen thousand decline and following a fifty-two thousand drop in the previous month.
Full-time employees increased in the latest three-month period, remaining above pre-pandemic levels, while part-time employees also rose after decreasing since the beginning of the year. On self-employment, part-time self-employed increased, while full-time self-employed remained low.
This week’s release should show more strong jobs data as the UK economy continues to show strong jobs number as the service sector improves further.
US Retail Sales
Holiday spending in the US is expected to show an increase over the Christmas period, despite the strapped US consumer tightening their belts recently.
Retail sales in the US declined 0.6% month-over-month in November of 2022, much worse than market forecasts of a 0.1% fall. It is the biggest drop so far this year, with sales of furniture (-2.6%), building materials (-2.5%) and motor vehicles (-2.3%) falling the most during the holiday season.
Data for November which includes the Black Friday and the Cyber Monday during which big discounts are offered, point to a slowdown in consumer spending amid high inflation and interest rates. It also shows that holiday shopping was pulled forward into October, when sales jumped 1.3%.