3 Numbers to Watch: UK Construction PMI, EZ PPI & US Auto Sales

Equity markets in Europe and the US received an unexpected lift yesterday after reports of a better-than-expected rise in US manufacturing output during September. The ISM manufacturing index came in at 51.5, compared to analysts’ forecasts of 49.5, following strong new orders and employment figures for the month. However, the stock market's gains were limited by concerns over Spain’s participation in a Eurozone bailout deal, with Spain’s economy minister Luis de Guindos meeting European Commissioner Olli Rehn in Madrid yesterday. The other major event yesterday was Ben Bernanke’s speech in Indiana, where he attempted to defend his decision to launch a third round of quantitative easing.

Looking ahead to today, the latest survey on construction output in the UK is due out. We also have Eurozone PPI and US vehicle sales to run through.

UK Construction PMI (08:30 GMT) Markit’s PMI Construction index for the UK is expected to move towards the 50 point neutral mark when it releases its latest survey data today. The PMI index slid from 50.9 in July to 49 points in August after the construction sector recorded its fastest drop in new orders since April 2009. However, the index is likely to make a recovery this month, rising to 49.9 in September, according to analysts’ estimates. But the UK construction industry still faces challenges. Reduced workloads have resulted in a solid decline in purchasing activity across the construction sector, while UK construction firms have indicated that business confidence is likely to remain weak for the foreseeable future.

Eurozone PPI (09:00 GMT) The Eurozone’s PPI measure for August is expected to rise in September as higher oil prices filter through the system. The index is forecast to rise from 0.4 percent in July to 0.6 percent in on a monthly basis in August, but up to 2.6 percent on a year-on-year basis, from 1.8 percent last month. This will put added pressure on the European Central Bank, which has recently talked up the low inflation levels in the Eurozone as providing scope for further policy easing. Although the Eurozone central bank is unlikely to change its policy stance, a high PPI figure may fuel anti-inflationary sentiment.

US Vehicle Sales (21:00 GMT) Total vehicle purchases in the US are expected to fall in August, as demand for new orders continues to slump. Data on US consumer durables out last week showed a marked decline in orders for automobiles during August. This is despite record-low rates for car loans, helped by the Federal Reserve’s latest quantitative easing programme.  Total sales are forecast to decline to USD 14.4 million in September from USD 14.46 million, while domestic sales are also due to move lower, down from USD 11.54 million in July to USD 11.4 million in August.

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