3 Numbers To Watch: EU Eco. Sent., US Jobless & Cons. Comfort
There is a wide variety of updates scheduled for Thursday, including the second revision for first-quarter US GDP - an update that is widely expected to more or less match the previously released +2.5 percent “advance” estimate. For a more timely macro insight, keep a close eye on today’s news for the Economic Sentiment Index for the Eurozone, followed by the latest weekly updates on two US data points: jobless claims and the Bloomberg Consumer Comfort Index.
EU Economic Sentiment Index (09:00 GMT) Last week’s flash estimate of consumer confidence for the Eurozone in May inched higher again, which implies that today’s update on the broader economic sentiment index (ESI) may rebound a bit. For each of the past two months, ESI (a composite measure of business and consumer sentiment) has slipped. That is no surprise, given the macro troubles that continue to weigh on Europe. But if consumer confidence is trending higher, albeit marginally, the odds look a bit brighter for expecting that ESI will stabilise.
Perhaps, although yesterday’s release of the OECD’s new economic outlook sees overall Eurozone economic activity falling further for the near term, a prediction that reflects "ongoing fiscal consolidation, weak confidence and tight credit conditions, especially in the periphery. Growth is projected to pick up only slowly during the second half of 2013,” OECD explains. But even that low bar for expectations presumes that overall economic sentiment has found a floor, or will soon do so. Today’s update on ESI will be closely watched for new perspective in the wake of the latest OECD forecast for Europe.
US Jobless Claims (12:30 GMT) The case for optimism in the US arguably begins with this data series. History suggests that fewer filings for jobless benefits equate with economic growth. You can never say never when it comes to macroeconomic analysis, but as long as the numbers for this report are falling (or at least sticking near the recent five-year lows) there is a good chance that the labour market will continue to grow. In turn, that suggests that the country will continue to steer clear of a new recession in the months ahead.
Weekly claims can bounce around rather violently, which is why it is best to take any single number with a grain of salt. But the trend is a more reliable guide, and by that measure most of the last several updates look encouraging. Economists expect more of the same in today’s report, with the consensus forecast projecting that last week’s claims will match the level in the previous release. Anything that sticks near that prediction will suffice for seeing the trend in this series as friendly for the big-picture outlook.
US Bloomberg Consumer Comfort Index (13:45 GMT) The Conference Board on Tuesday reported that consumer confidence rose to a five-year high this month. A good sign obviously, particularly if the recent gains can hold at current elevations if not climb even higher. Today’s weekly update from Bloomberg will help evaluate the odds for thinking positively.
Based on weekly surveys, the Consumer Comfort Index offers a more granular look at the trend with sentiment throughout each month. The readings can range from +100 (all participants in the survey have an optimistic outlook) to -100 (everyone’s pessimistic). The recent rise in this index, moving closer to the neutral level of zero, supports the upbeat report from the Conference Board this week. Even if today’s number from Bloomberg merely holds its ground, the case will strengthen for expecting that the broad economic profile for May, once all the numbers are in, will continue to lean toward growth.