Euro area HICP expected to have eased in November

Emily Nicol

Japan’s retail sales and industrial production to provide update at the start of Q4
In Japan, this week’s data calendar gets underway tomorrow with the latest labour market and retail sales figures for October. Amid an expected improvement in the unemployment rate (down 0.1ppt to 2.5%), retail sales are forecast to have risen a further 1%M/M following growth of 1½%M/M in September, although this will in part reflect the impact of higher prices rather than stronger spending at the start of Q4. Certainly, the latest consumer confidence survey (Thursday) is unlikely to report a significant improvement in willingness to spend in November. Not least reflecting persisting supply constraints, industrial production (data due Thursday) is forecast to have declined (-1.7%M/M) for the second successive month in October. Meanwhile, the MoF’s capital spending survey (Thursday) will give an update on firms’ performances over the past quarter, with the capex and inventories measures set to feed into the updated Q3 GDP estimate.

Euro area flash HICP inflation expected to have eased in November
All eyes in the euro area this week will be on the flash inflation estimates for November on Wednesday. Reflecting an anticipated easing in energy price inflation, and despite a further upwards drift in food inflation, the headline HICP rate is expected to have slipped back from October’s record high of 10.6%Y/Y, albeit remaining in double-digit territory: we forecast a decline of 0.4ppt to 10.2%Y/Y. However, core inflation may well have edged slightly higher in November to above 5%Y/Y for the first time amid a further pickup in services inflation. Ahead of this, German and Spanish figures are due tomorrow. Friday’s euro area PPI figures will also be of note and are likely to report a notable drop in October, in line with the downside surprise in Germany.

Commission survey likely to signal stabilisation in November but still signal contraction in GDP in Q4
The European Commission business and consumer sentiment surveys – arguably the best guide to euro area GDP growth – for November are due tomorrow. Given the improvement in the flash consumer confidence index and stabilisation in the flash PMIs, the headline Economic Sentiment Indicator is likely to have increased from October’s near-two-year low (92.5), albeit remaining below the long-run average and suggestive of a slowing economic trend. Against this backdrop, euro area unemployment figures (Thursday) might well report a modest increase in the jobless rate in October, while euro area bank lending numbers (today) are likely to confirm weaker demand for household loans, not least reflecting rising borrowing costs. In terms of ECB communication, President Lagarde is due to speak before the European Parliament’s ECON committee today.

UK retail survey likely to signal subdued sales, amid higher prices and weak demand for consumer credit
A relatively quiet week for top-tier UK releases kicks off today with the CBI distributive trades survey for November, which might well prove disappointing as increasingly diminished household budgets and caution over increased economic uncertainties may offset any boost to spending from Black Friday discounting. The erosion of household disposable income will be illustrated in the BRC shop price index (Wednesday) amid another notable rise in food inflation. Despite this backdrop, the BoE’s lending figures (tomorrow) are likely to suggest that demand for consumer credit remained extremely subdued due to the recent jump in borrowing costs. In addition, on Wednesday, the BoE will publish its monthly Decision Maker Panel data, including firms’ latest inflation expectations, while it will begin sales of its Gilts purchased during the market stress between 28 September and 14 October in “demand-led” operations from tomorrow.

US non-farm payrolls expected to reflect slowing jobs market; Fed Chair Powell due to give a keynote speech on Wednesday
In a data-heavy week in the US, one key highlight will be Friday’s labour market report. A pick up in unemployment claims through the first half of the month and increasing corporate redundancies suggest a slowdown in employment growth: our colleagues in Daiwa America forecast an increase in non-farm payrolls of 200k, compared with the near-260k increase in October, which itself was the softer rise since 2020. Ahead of this, Thursday’s personal income and spending numbers will be of interest, with a modest increase in income (0.3%M/M) but firmer nominal spending numbers (0.9%M/M) due not least to high prices. This notwithstanding, the closely watched core PCE deflator is expected to rise at a softer pace (0.3%M/M) than in recent months. Consumer confidence (tomorrow), manufacturing ISM (Thursday), a revised estimate of Q3 GDP (Wednesday) and a range of housing market indicators are also due this week. In addition, Fed Chair Powell will give a keynote speech on the economic outlook, inflation and the labour market on Wednesday.

Chinese PMIs likely to flag ongoing weakness in activity amid continuing Covid lockdowns
As protests in China against stringent Covid restrictions were widespread over the weekend, this week’s PMIs (Wednesday) are expected to show that activity remained extremely subdued in November, with both the manufacturing and services survey likely to remain consistent with contraction. In October, the manufacturing output (49.6) and services activity (48.7) PMIs fell to their lowest in five months. 

Categories : 

Back to research list


This research report is produced by Daiwa Securities Co. Ltd., and/or its affiliates and is distributed by Daiwa Capital Markets Europe Limited in the European Union, Iceland, Liechtenstein, Norway and Switzerland. Daiwa Capital Markets Europe Limited is authorised and regulated by The Financial Conduct Authority and is a member of the London Stock Exchange and Eurex Exchange. Daiwa Capital Markets Europe Limited and its affiliates may, from time to time, to the extent permitted by law, participate or invest in other financing transactions with the issuers of the securities referred to herein (the “Securities”), perform services for or solicit business from such issuers, and/or have a position or effect transactions in the Securities or options thereof and/or may have acted as an underwriter during the past twelve months for the issuer of such securities. In addition, employees of Daiwa Capital Markets Europe Limited and its affiliates may have positions and effect transactions in such securities or options and may serve as Directors of such issuers. Daiwa Capital Markets Europe Limited may, to the extent permitted by applicable UK law and other applicable law or regulation, effect transactions in the Securities before this material is published to recipients.

This publication is intended for investors who are not Retail Clients in the United Kingdom within the meaning of the Rules of the FCA and should not therefore be distributed to such Retail Clients in the United Kingdom. Should you enter into investment business with Daiwa Capital Markets Europe’s affiliates outside the United Kingdom, we are obliged to advise that the protection afforded by the United Kingdom regulatory system may not apply; in particular, the benefits of the Financial Services Compensation Scheme may not be available.

Daiwa Capital Markets Europe Limited has in place organisational arrangements for the prevention and avoidance of conflicts of interest. Our conflict management policy is available at  /about-us/corporate-governance-regulatory. Regulatory disclosures of investment banking relationships are available at