Japan’s consumption and wage figures likely to suggest a weak start to Q4
Today’s final Japanese services PMIs broadly aligned with the flash release to signal a marked deterioration in November despite the relaxation of travel restrictions and the introduction of the government’s discounted travel scheme. While the headline activity index was nudged a touch higher from the flash, it was still down 2.9pts from October at 50.3, consistent with stagnation in the sector. And with the equivalent manufacturing survey (the output PMI fell to 45.8) implying the steepest contraction since July 2020, the composite output PMI was down 2.9pts on the month at 48.9, the weakest reading since February. In terms of hard data, the latest household spending and BoJ consumption activity indices (tomorrow) are likely to show that expenditure fell in October as the recent rise in prices weighed on households purchasing power. Indeed, while average earnings growth (data due tomorrow) is expected to have remained at a solid 2%Y/Y in October, in real terms this would leave wages down more than 2%Y/Y.

Euro area retail sales figures set to illustrate hit to household purchasing power
The slowing euro area economic momentum will be illustrated by today’s figures, with October retail sales expected to have fallen sharply in line with weakness in Germany (-2.8%M/M) and France (-2.7%M/M). Final services and composite PMIs for November (due shortly) are also likely to imply contraction in each of the euro area’s largest member states. Ongoing challenges in the manufacturing sector at the start of Q4 will likely be evident in German factory orders (tomorrow) and industrial production figures (Wednesday). We will also get an updated estimate of euro area Q3 GDP data (Wednesday), which will likely show that growth last quarter (0.2%Q/Q) was underpinned by household consumption, while net trade was a drag. Ahead of the ECB’s policy-setting meeting on 15 December, the results from its monthly consumer expectations survey will also be watched (Wednesday).

UK surveys to dominate the data flow, with BoE inflation attitudes survey to be closely watched
Like elsewhere, today will bring the release of the UK final services and composite PMIs, followed by the construction PMIs tomorrow. While the flash UK PMIs for November suggested some stabilisation, the headline composite PMI (48.3) was trending so far in Q4 some 2pts lower than the Q3 average and consistent with a steeper pace of contraction. Meanwhile, the BRC retail sales monitor for November (tomorrow) is likely to suggest still very weak consumer spending despite Black Friday discounting. Thursday sees the release of the RICS residential survey for November, which will further flag a weakening housing market amid lower demand and higher borrowing costs. And, ahead of the MPC’s policy-setting announcement on 15 December, Friday’s release of the Bank of England’s quarterly inflation attitudes survey and the REC/KPMG report on jobs will be closely watched.

US services ISM set to fall further; PPI inflation and survey inflation expectations in focus on Friday
Another relatively busy week for top-tier US releases kicks off today with November’s services ISM, with the headline activity index expected to have fallen for the third consecutive month to be some 15pts lower than its level a year ago (68.4) but nevertheless still comfortably in ‘expansionary’ territory. Updated October factory orders data (today) and trade report (tomorrow) will provide further guidance to activity at the start of Q4. Focus at the end of the week turns to November’s PPI figures (Friday) which are expected to report a further easing in pipeline pressures on the back of softer energy and food prices. Indeed, our colleagues in the US forecast an increase of just 0.1%M/M, to leave the annual rate down around 1ppt to 7.0%Y/Y, which would be the softest increase since May 2021. The University of Michigan consumer survey (Friday) is likely to report another depressed sentiment reading in the first week of December. But much attention will be on the survey’s measure of inflation expectations, with medium-term expectations having ticked slightly higher previously.

Chinese trade to illustrate challenging economic outlook, inflation set to remain very subdued
A key focus in China this week will be November’s goods trade report on Wednesday. Due to persisting Covid restrictions and associated production challenges, weakening external demand and a high base a year ago, exports are expected to have fallen sharply compared with a year earlier, with the Bloomberg consensus survey expecting a drop of more than 4%Y/Y. But weaker domestic demand will also be illustrated in imports, which are expected to fall by more than 7%Y/Y. Friday, meanwhile, will bring November inflation figures, with headline CPI inflation forecast to have declined by around ½ppt from 2.1%Y/Y in October, with PPI inflation expected to remain in negative territory for the second successive month.