January 1 2017

Jan. 1, 2017 (Commerzbank AG) – Euro zone: Inflation rate leaps above 1%

The euro zone rate of inflation is likely to leap from 0.6% in November to 1.1% in December. Although this is exclusively due to energy price movements, the higher inflation rate should further drive up inflation expectations, to the ECB’s delight. Something the ECB may be less pleased about is the fact that the core rate will stick to 0.8%. In the USA, we are looking for another rise in the ISM index, in line with the global recovery in the manufacturing sector, as well as another solid employment report.

USA: Solid data to confirm the recovery

Given the more favourable results in the regional manufacturing surveys we expect the manufacturing ISM index to increase to 54.7 in December (consensus 53,7). Back in November, the index had already moved up considerably, from 51.9 to 53.2. As regards the US labour market, we are looking for a solid December report. We expect payrolls to increase by 180 thousand, which would be in line with the current trend (consensus 175 thousand). Following its strong decline in November, the rate of unemployment appears to be in for a minor counter-movement. As regards average hourly wages, where the monthly changes are significantly distorted by calendar effects, we are looking for a marked increase of 0.3% after previous months’ drop. Wage pressures remain on the increase.