| LONDON, March 9
LONDON, March 9 Europe's and Asia's industrial
health will be closely watched in the coming week for an
indication of how solid - or weak - a footing the global economy
was on at the start of the year.
With China's leaders seeking to rebalance the world's
industrial powerhouse more toward consumer spending, and with
bad weather distorting most United States data since the start
of the year, some clarity would be helpful.
After private sector business surveys suggesting services
activity around the world is on the up, investors and
policymakers will shift their focus to industrial production
figures for the euro zone, Britain, Japan and China.
Industrial output growth in China, the world's second
largest economy, is likely to have slowed further in January
from 9.7 percent in December, hurt by weaker local and foreign
Economists in a Reuters poll forecast a decline to a 9.5
percent annual pace, which is still strong and would not yet
show the kind of rebalancing policymakers are looking for. Those
figures are due on Thursday.
"China's export growth is likely to have softened in
February after the surge in January due to the front-loading of
exports before the Lunar New Year," said David Mann at Standard
Beijing says it is aiming for economic growth of about 7.5
percent this year, compared with last year's actual expansion of
7.7 percent, as it seeks to revamp a maturing economy and move
it towards slower but better-quality growth.
Germany, whose export-driven economy has been the driving
force behind the 18-member euro zone's very slow recovery from
recession, will also publish trade data this week.
"Last year, the German trade engine spluttered, already
suffering from weaker demand from some emerging economies," said
James Knightley, senior economist at ING.
"Ongoing problems in emerging markets combined with the
winter weather in the United States could make the German export
soft patch last longer than expected."
Selling more goods to a swelling global consumer base in
Asia and elsewhere may be just the mix required. But as long as
unemployment in the bloc remains high, there is little prospect
for a strong rebound in euro zone consumer spending.
Industrial production figures for the euro area are expected
to show a healthy rebound in January from December's 0.7 percent
decline, according to the latest Reuters poll.
The main Markit Purchasing Managers' Index rose to its
highest in more than 2-1/2 years last month, which may help
explain why the European Central Bank decided to leave policy
unchanged at its March meeting and signal it is content to wait
After the ECB appeared to rule out any middle-of-the road
options, hinting the bank would either do nothing or else take
bold policy action should the outlook deteriorate, there are a
host of its policymakers speaking during the week, possibly
offering further guidance.
In the United States, where jobs growth was better than
expected in February, there is much more certainty about the
trajectory of monetary policy.
For the Federal Reserve to alter the pace at which it is
winding down its massive bond-buying program - 10 billion
dollars per month - the U.S. economic outlook would have to
change dramatically, top Fed officials said last week.
One, Atlanta Fed President Dennis Lockhart, told Reuters in
an interview that even a third month of below-par U.S. jobs
growth would not be enough to warrant such a move.
After employers added 175,000 jobs to their payrolls last
month, having already created 129,000 new positions in December,
any talk of a change will have been muted.
If anything, U.S retail sales data due on Thursday are
expected to show a return to growth in February after
unseasonably cold weather took its toll the month before.
That could solidify expectations that the Fed will wind down
its bond purchase programme by the end of this year and consider
raising interest rates some time in 2015.
Japan will announce revisions to its fourth quarter GDP data
on Monday - something it is prone to do heavily. Tokyo said last
month the economy expanded 0.3 percent in the fourth quarter,
well below the median estimate of 0.7 percent.
The disappointing data poses a challenge to Japanese
policymakers as unprecedented stimulus efforts have showed few
signs of sparking momentum in consumption and exports. Inflation
also remains dangerously low there.
Central banks in Korea, Indonesia and Thailand all meet this
week, and are expected to leave policy unchanged.
Thai consumer confidence tumbled to a 12-year low in
February, highlighting the toll that prolonged political unrest,
now in its fifth month, is taking on Southeast Asia's
But the Reserve Bank of New Zealand, well ahead of most
developed nations, is nearly certain to lead the way with a rate
hike at its policy review to choke off growing inflation
pressures in its rapidly-growing economy.