Market Mover - BNP PARIBAS - Investment Services India

Key Data Preview
Chart 5: Italian GDP and IP
Source: Reuters EcoWin Pro, BNP Paribas. Note: Q4 IP based on our
estimates for December
% Q4 (f) Q3 Q2 Q1
GDP q/q 0.1 0.6 -0.5 -2.7
GDP y/y -2.5 -4.6 -5.9 -6.0
Key Point:
Growth will slow from Q3 on seasonal distortions.
The underlying trend is for a modest recovery going
into 2010.
BNP Paribas Forecast: Payback
Italy: GDP (Q4 2009)
Release Date: Friday 12 February
The 0.6% q/q rise in Q3 GDP overstated the strength in the
underlying trend due to seasonal distortions. A sharp
increase in August industrial output artificially boosted Q3’s
IP (+4.4% q/q) at the expense of Q4, when we expect
production to have fallen by around 1% q/q. This will be
partly offset by another, albeit modest, increase in services
activity, in line with the persistent improvement shown by
recent surveys.
On the demand side, flat growth in retail sales and survey
evidence point to persistent weakness in consumer
demand. Noteworthy has been the contrast in the services
survey between the sharp improvement in activity for
services to businesses and financials and the weaker
assessment in services for households. Poor employment
prospects and a slowdown in real wage growth will
continue to weigh on consumer demand going into 2010.
Similarly, we expect investment spending to remain
sluggish, given very low capacity utilisation and persistent
uncertainty. Finally, we expect a positive albeit modest
contribution to growth from net trade (+0.2% q/q).
Weakness in domestic demand will persist in 2010. While
we expect the economic recovery to continue, growth will
remain modest.
Chart 6: US Retail Sales in Gradual Recovery
Source: Reuters EcoWin Pro
% m/m Jan (f) Dec Nov Oct
Retail Sales -0.2 -0.3 1.8 1.2
Ex-autos 0.1 -0.2 1.9 0.0
Key Point:
Retail sales are forecast to decline by 0.2% in
January as auto sales declined and sales of general
merchandise weakened.
BNP Paribas Forecast: Small Decline
US: Retail Sales (January)
Release Date: Friday 12 February
Retail sales are expected to decline by 0.2% in January
following a small fall in December. Consumers apparently
purchased holiday presents early in Q4 during pre-
Christmas sales and then retreated. In January, retailers
had far less inventory to offer in post-Christmas sales and
therefore sales of general merchandise declined by an
estimated 1%. However, consumers also reduced their
purchases of autos as well. The unit volume of domestic
vehicle sales plunged by 7% in January, with larger SUVs
the hardest hit. The Toyota problems contributed to the fall,
but were not the principle factor behind the large decline.
Retail sales ex automobiles rose by an estimated 0.1%.
Apart from food and healthcare, the only major component
of retail sales to rise in January was gasoline – due to an
estimated 4% rise in gasoline prices. Retail sales in
January ex-gasoline contracted at an estimated 0.5%.
Consequently, the budget constraints faced by many
consumers and ignored before the holidays are finally
causing consumers to hunker down and purchase just the
necessities.
Market Economics 12 February 2010
Market Mover
49
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