Analysts at Nomura offered their outlook for the week ahead in Europe.
“UK April PMIs and euro-zone flash Q1 GDP are in focus this week.
UK PMI surveys (Tuesday, Wednesday and Thursday): Our forecasts for April’s PMIs are unchanged from March. On the upside, export orders in the latest CBI survey were strong thanks to the global and European growth recoveries and a weaker sterling. On the downside, we expect consumer spending and investment demand to wane as the year progresses thanks to Brexit uncertainty and the past falls in the currency taking their toll on consumer prices.
Euro area flash Q1 GDP (Wednesday): We expect the first reading of euro area Q1 GDP to climb 0.6% q-o-q from 0.5% q-o-q in Q4. In the details we expect domestic consumption to maintain its recent strong momentum and exports to recover. Overall, we see the risks to our forecasts as being broadly balanced. If regional growth data continue to improve, we may not have to wait too long before the ECB indicates a change in its policy stance. We expect the ECB to announce a tapering of the QE programme at the September meeting for enactment at the start of next year.
UK household borrowing (Thursday): The Bank of England remains concerned about the pace of consumer credit growth, which has been supported by past growth in consumer spending (which may not persist) and a loosening of credit conditions – including falling interest rates on personal loans. If we are right in our view of slowing consumption (see UK article in this publication) then consumer credit growth may well slow in the coming months. Other UK data: Aside from the PMI surveys this week’s data are heavily consumer/ household-centric, including the BRC’s measure of shop price inflation (which correlates particularly well with headline CPI inflation), new car registrations and the Halifax house price index.
Other eurozone data: This week is heavy with final PMI data for April for the eurozone economies. We are not expecting any revisions to the headline composite, manufacturing or service sector indices for the eurozone. Regional PPI and retail sales data for March will also be published.”