Market Mover - BNP PARIBAS - Investment Services India

Key Data Preview
Chart 17: UK Retail Sales vs BRC Retail Sales
Monitor
Source: Reuters EcoWin Pro
Jan (f) Dec Nov Oct
% m/m -0.6 0.3 -0.3 0.5
% y/y 1.0 2.1 2.7 3.5
% 3m/3m 0.2 0.7 0.7 1.1
% 3m/yr 1.9 2.7 3.0 2.8
Key Point:
We expect a weather-induced contraction in retail
sales in January.
BNP Paribas Forecast: Weather distortion
UK: Retail Sales (December)
Release Date: Friday 19 February
We expect UK retail sales to post a 0.6 percentage point
contraction in January, heavily influenced by the weather.
More specifically, the worst snowfall in decades brought
many parts of the country to a standstill. This will have
physically prevented consumers from getting to the shops.
There is also the possibility that the VAT hike may have
acted as a drag on spending.
Survey indicators have been pretty poor indicators of
official retail sales in recent months. Nonetheless, for what
it is worth, both the CBI and BRC gauges of high street
spending suffered setbacks in January. The accompanying
commentary attributed this to the poor weather.
December’s retail sales data were disappointing despite
upbeat survey indications. We suspect that less generous
than usual discounting was responsible. In turn, this is
likely to have reflected cautious Christmas inventory
management, restricting the need to slash prices. If this is
the case, it is also likely to have suppressed retail sales
growth during January.
Overall, we expect a weather-distorted reading. The
flipside is that February’s data are likely to enjoy a bounce
following the big thaw.
30
20
10
0
-10
-20
-30
-40
-50
-60
-70
-80
Chart 18: French Industrial Survey
Own Production Outlook
General Production Outlook
Composite Indicator (RHS)
01 02 03 04 05 06 07 08 09
Source: Reuters EcoWin Pro
115
110
105
100
95
90
85
80
75
70
65
SA Feb (f) Jan 10 Dec Feb 09
Composite index 93 92 88 70
Overall Manuf. Outlook -4 -4 -11 -76
Own Manuf. Outlook -6 -9 -8 -46
Key Point:
The financial markets turmoil may weigh on
business confidence, but should not affect the
INSEE industrial survey too heavily.
BNP Paribas Forecast: Smaller Gain
France: Monthly Industrial Survey (February)
Release Date: Friday 19 February
After a correction at the end of 2009, industrial confidence,
according to the monthly INSEE survey, started to recover
in January. The correction was stronger for the own
production average and the recovery has not yet started,
while the general outlook has performed better.
Looking at other business surveys for France, it is notable
that PMIs have either stabilised (for manufacturing) or
declined (for services) over the last few months, while Bank
of France and European Commission surveys are still on a
rising trend. This difference may be explained by the fact
that PMIs have been above their long-term average since
last summer while the two others only reached this level in
December.
We believe the own production outlook should recover,
while the general perception should stabilise. The former
should be supported by the higher orders already reported
in January survey, while the latter sub-index may suffer
from the general economic uncertainties.
Clearly, the very poor equity market performance and the
turmoil seen on the bond market during the first week of
February are a threat to business confidence. However, we
believe that the INSEE industrial survey should not be
overly affected.
Market Economics 12 February 2010
Market Mover
55
www.GlobalMarkets.bnpparibas.com