Weekly Market Outlook

The main events which we have picked for you are just four, but each one deserves special attention. On Monday-Wednesday, be prepared for the UK October consumer credit figures and the manufacturing and services PMIs for November. Tuesday brings other significant data: the ISM manufacturing PMIs of the US and the EU. Wednesday is dedicated to the global services PMIs data. Finally, we close the week on Friday with the crucial US unemployment rate and non-farm payrolls numbers.

UK October Consumer Credit and November Manufacturing/Services PMIs (Monday-Wednesday)

This week will reveal important figures from the UK economy. There was a pickup in flash manufacturing PMIs last week to 55.2. As for services, they declined to 45.8, but were still above expectations. Construction is also anticipated to fare well, because the sector stayed open in November.

This week brings data on consumer credit and mortgage approvals for October. Taking advantage of stamp duty changes, still available until March next year, homeowners contributed to strong figures of approvals. The result has been an increased interest in buying and selling. The data of approvals have reached their best level since October 2007, though in April they plummeted to a record low.

US & European November Manufacturing PMIs (Tuesday)

Compared to services, manufacturing has fared much better, showing great resilience. The recent flash PMIs showed better data for Germany than for France. France had a slight decline to 49.1, and Germany stayed at 57.9, perhaps aided by inventory restocking, and by greater demand on part of China, whose economy has staged a strong recovery.  However, if further lockdown measures are introduced, they may impact economic activity for the worse.

In China, manufacturing has already regained its start-of-year levels, and is going on strong. US data also indicate strength. The ISM figures this week may hint what to expect from the non-farm payroll report on Friday.

Global Services PMIs for November (Wednesday)

This week’s services European PMIs may come as an unfavourable surprise, owing to the recent partial lockdowns in large areas across Europe. According to most recent data, France and Germany have suffered large contractions in their November data. The latest data on Spain and Italy will probably show the same tendency. This is a source of worry for EU leaders, given the four successive months of contraction. The fierce arguments about the fiscal stimulus pandemic plan in the EU, and the vetoes by Hungary and Poland, impede the financing of countries like Italy and Spain in the foreseeable future. 

China and the US are expected to show much more positive data in their services sectors.

US November Unemployment Rate & Non-Farm Payrolls Data (Friday)

The US economy has experienced a rebound, with a slump in the unemployment rate in October to 6.9%, after April’s peak of 14.7%. A further decline to 6.7% is expected in November. After going down until just two weeks ago, jobless claims have started to climb again. The absence of fiscal stimulus is exerting some negative impact on the US economy. A positive development in October though was the rise in participation rate, as more workers are returning to the jobs market.

However, the shutdowns around the US may cause jobs growth to stall, and another factor for that may be the lack of further fiscal stimulus from US politicians. There are still more than 9 million jobless Americans than there were at the year start. Friday’s non-farm payrolls data are widely expected to add 500,000 more jobs to October’s 638,000. But these still cannot compensate for the 21.5 million jobs lost in March and April.