European Manufacturing and Services Data Looks Dire
It is central bank day here in Europe, as the BoE and ECB announce their latest monetary policies around lunchtime.
So far this week, the macroeconomic data that's come out of Europe has not been particularly encouraging. In contrast, across the pond, where Americans got their first chance to see both Presidential candidates go head to head in their first live television debate, there's been some more positive statistics.
Yesterday's ADP private payrolls figure was a lot better-than-expected and the services data also came in much higher than predicted.
This compliments the recent rise in consumer confidence, which is a critical component for the US economy.
Tomorrow will see the Non-Farm Payrolls data, and this is expected to post a triple digit gain. Therefore, despite the recent downward revision to GDP, things in the world's largest economy are in good shape as the Presidential candidates gear up for next month's election.
Here in Europe, however, things are less rosy. The manufacturing and services data has been dire to say the least.
Only the UK's PMI services survey is above the 50 mark, with even Germany reporting a surprise contraction yesterday, with a figure of 49.7.
So, even though the central banks are doing what they believe is enough to boost growth, it simply doesn't seem to be working.
The UK's funding for lending scheme has got off to a bad start, with the recent credit and mortgage data pointing to a woefully low number of new loans.
Unfortunately, we cannot expect anything from either the BoE or ECB today. It's highly unlikely that the BoE will cut rates, at least at this month's meeting, and they won't want to expand their asset purchasing program until they've seen the first release of Q3 GDP.
For the ECB, we can expect more rhetoric from Draghi about how he has done his part and it is now up to governments to do their bit. In other words if they want to benefit from his OMT bond buying program, they have to be part of the EFSF/ESM program.
There will no doubt be lots of questions for the ECB President at the press conference. Many of these will centre on the various legal wranglings and talk of yet another restructuring of Greek debt, so it will be interesting to get Super Mario's take on these important issues.
Whilst some are expecting another rate cut from the ECB, it is unlikely to be today.
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By Simon Denham, 4 October 2012