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 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 demand.
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 Chartered.
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 and see.
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.
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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 program 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 second-biggest economy.
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.
(Editing by Catherine Evans and Ruth Pitchford)
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