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Key Data Preview
Chart 7: UK GDP vs Unemployment
Source: Reuters EcoWin Pro
Apr (f) Mar Feb Jan
Claimant Count Chg -25k -32.9k -40.1k 16.2k
ILO Emp 3m Chg -71k -90k -54k
ILO Unemp 3m Chg 25k 43k -33k
Ave Earns % 3m/yr 2.2 2.3 0.8
Ex Bonus % 3m/yr 2.0 1.7 1.5
Key Point:
We expect the pace of improvement in claimant
count unemployment to begin to moderate.
BNP Paribas Forecast: Mixed
UK: Labour Report (April)
Release Date: Wednesday 12 May
We expect the labour report to continue to show a mixed
picture. The claimant count measure of unemployment has
been significantly more robust than expected for several
months – registering a fall in unemployment in excess of
70k over the last two months. Meanwhile, the ILO measure
has shown the exact opposite – a near 70k rise in
unemployment and a 160k fall in employment.
Part of the divergence may be due to timing, since the ILO
measure is a 3-month change and may still be reflecting
snow-related disruption. However, the other element of the
difference is likely to reflect eligibility to claim
unemployment benefits as well as alternatives to seeking
employment such as training programmes.
The recent pace of decline in claimant count
unemployment (approaching 100k per quarter) would
typically be consistent with GDP growth in excess of 1.5%
q/q – stronger than even our above-consensus forecast.
Hence we expect the pace of improvement to moderate
from this release onwards.
Average earnings growth has accelerated due to base
effects, though by less than it might have been expected
to. We expect the headline measure to be broadly stable in
March as the base effects have now worked through.
65
60
55
50
45
40
35
30
25
20
Chart 8: German GDP & PMI
15
-3.5
98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
Composite PMI
German GDP
(% q/q, RHS)
Seas. Adjusted Q4 10 Q4 09 Q3 09 Q2 09
GDP % q/q -0.2 0.0 0.7 0.4
GDP % y/y 0.9 -2.4 -4.8 -5.8
Key Point:
The impact of unusually cold weather on
construction activity will hit GDP in Q1 but survey
data point to a much stronger Q2.
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
BNP Paribas Forecast: Q1 Weakness
Germany: GDP (Q1 2010, ‘Flash’ Estimate)
Release Date: Wednesday 12 May
While leading indicators point to a marked improvement in
German GDP growth going forward, the adverse impact of
the unusually cold weather on activity, in the construction
sector in particular, is consistent with a weak performance
in Q1: we forecast a 0.2% q/q contraction in GDP.
Construction output is on track to decline at a double-digit
q/q rate in Q1, which we calculate will subtract around ¾ of
a percentage point from GDP. The narrowing of the trade
surplus in Q1 is consistent with a significant drag on GDP
from net exports also, following an unusually large boost to
growth from this area in Q4 last year.
Another weak quarter for private consumption is probable
too. Retail sales fell by 0.9% q/q in Q1, the fifth contraction
in the past six quarters.
The good news is that the rebound in global manufacturing
activity has seen leading indicators step up a gear in recent
months, indicative of an acceleration in growth beyond Q1
(see chart). Data on domestic capital goods orders have
also signalled a pick-up in investment spending, in line with
the improvement in business confidence.
The y/y rate of change in GDP will rise into positive territory
in Q1 for the first time since Q3 2008, although this is
purely a consequence of favourable base effects.
Market Economics 7 May 2010
Market Mover
74
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