MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
120
115
110
105
100
95
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85
80
Chart 1: German Ifo Business Climate
Expectations (4-Mth Lag)
Current Conditions
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93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
Sep (f) Aug Jul Jun
Headline 106.7 106.7 106.2 101.8
Expectations 104.2 105.2 105.6 102.5
Current Conditions 109.2 108.2 106.8 101.2
Key Point:
Ifo’s business climate index remains very strong but
expectations are likely to moderate given evidence of
weaker external growth.
BNP Paribas Forecast: Cooling Expectations
Germany: Ifo Business Climate (September)
Release Date: Friday 24 September
Ifo’s business climate index rose to its highest level in over
three years in August, propelled by the strength of the subindex
measuring current business conditions.
The latter rose by a cumulative eighteen points in the six
months to August, the strongest run of data in the history of
the series since unification.
This strength largely reflects the exceptional strength in the
manufacturing and export sectors, though domestic sectors
including retail have also shown a marked improvement in
recent months.
As the chart shows, the current assessment is still several
points below its high in the previous expansion, implying
further upside potential, though recent ’hard’ data such as
industrial output, manufacturing orders and exports have
shown signs of weakening.
Given the evidence of a moderation in activity in some of
Germany’s most important markets, including the US and
China, Ifo’s survey of future expectations is likely to top out
in the period ahead.
Net, we expect Ifo’s business climate index to go sideways
in September, though given the external backdrop, we look
for a moderation in the subsequent months.
0.6
0.5
0.4
0.3
0.2
0.1
0.0
-0.1
-0.2
-0.3
-0.4
-0.5
Chart 2: France Job Seekers
01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
Unemployment Rate
(3-m change, percentage points)
Job Seekers (3m change, thousands, RHS)
200
150
100
50
0
-50
-100
-150
SA Aug (f) Jul Jun Aug 09
Job Seekers m/m k 0.0 -14.4 -8.6 28.6
Job Seekers y/y % 4.2 5.4 6.9 26.0
Key Point:
The trend has changed from rising to declining, but
the August figure may blip slightly higher.
BNP Paribas Forecast: Stable
France: Job Seekers (August)
Release Date: Friday 24 September
In the last two months, the number of job seekers has
dropped; this represents a reversal in the unemployment
trend. However, the decline has been moderate and, since
it is recent, another month of increase cannot be ruled out.
August is a particular month in that a significant number of
seasonal jobs in the tourism activity can be subject to early
ending because of adverse weather. The level of industrial
activity is also still weak in absolute terms so the need for
temps to replace workers on holidays is less acute. Since
the number of job seekers is adjusted in accordance with
the usual seasonal pattern, we have forecast the number of
unemployed people to remain steady in August.
Nevertheless, the underlying trend has now switched from
the increase that prevailed since Q2 2008 to a modest
decline.
The unemployment rate reported by Eurostat has not
declined yet but we expect this to occur very soon –
probably in the figure for August – unless the summer
months (June and July) are revised down from the present
estimate of 10.0%. The Eurostat figure will be released on
1 October.
Market Economics 23 September 2010
Market Mover
www.GlobalMarkets.bnpparibas.com
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