MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
10
5
0
-5
-10
-15
-20
-25
-30
-35
Chart 9: Eurozone Sentiment by Sector
Consumer
Industry
-40
91 92 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
Economic Sentiment 101.5 101.8 101.1 98.9
Industry -5 -4 -4 -6
Services 7 7 7 4
Consumer -11 -11 -14 -17
Key Point:
The economic sentiment index is likely to remain
elevated but a moderation in the industrial sector is
forecast, in line with other survey data.
BNP Paribas Forecast: Topping Out
Eurozone: Economic Sentiment (September)
Release Date: Wednesday 29 September
The eurozone economic sentiment index improved in five
of the six months to August, reaching its highest level since
March 2008. The pick-up in sentiment has also been more
broad based over recent months.
The key driver of the improvement in sentiment early in the
expansion was industrial sentiment, which has the highest
weighting of the five main sub-sectors (at 40% of the total).
The moderation of other leading indicators for the industrial
sector, however, including the PMI for manufacturing, is
indicative of industrial sentiment losing ground in coming
months against a backdrop of slowing global growth.
Having lagged during the initial stages of the recovery, the
domestically driven sentiment sub-surveys, such as those
for the services and retail sectors, have improved markedly
over the summer months. The improvement in these areas
has been most pronounced in Germany, which is linked to
the relative strength of its labour market.
Preliminary September figures for the eurozone, however,
showed consumer sentiment flat at -11, the first month in
four not to show an improvement.
Surveys of price expectations in the household sector have
risen sharply from 2009’s lows, as have pricing intentions
of industrial firms, but they remain well below past peaks.
Net balance
40
30
20
10
0
-10
-20
-30
-40
-50
Chart 10: French Hh Confidence
Good Time to Save
Good Time to Spend
Headline Index
03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
Diffusion Index,
SA Sep (f) Aug Jul Sep 09
INSEE indices:
Overall -39 n.a. -39 -35
Buying opportunity -22 n.a. -24 -26
EU Commis. Index:
Headline -20.0 -18.2 -22.3 -24.4
Key Point:
Economic developments are favourable, but the
political context is highly adverse.
BNP Paribas Forecast: Stable
France: Household Confidence (September)
Release Date: Wednesday 29 September
As usual no survey is carried out in August, so the
September results will be compared to July’s.
Over the summer, inflation eased. Petroleum product
prices, to which consumers pay special attention, declined.
Employment rose in 0.2% q/q in Q2 with Q3 probably also
seeing an increase. That resulted in a slight decline in the
number of job seekers. Although households will not feel
this easing, they probably understood that some
improvement has occurred in the labour market. Overall,
economic trends are positive for confidence but politics are
clearly adverse.
In terms of political developments, we saw a slight recovery
of the president and prime Minister in the polls over the
summer, but this move has now reversed. The massive
demonstrations on 7 September show how concerned the
public is about the pension reform and more generally
about its standard of living.
As a result, we forecast the headline confidence index to
be unchanged although the opportunity to make important
purchases should have improved slightly. Since the
savings ratio trend is key for future consumption, it will also
be of interest to see whether the recent divergence
between the willingness and the ability to save persists.
Market Economics 23 September 2010
Market Mover
www.GlobalMarkets.bnpparibas.com
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