Details from overnight: UK, German and Canadian data in focus – TDS
Analysts at TD Securities details the key data events from overnight, including UK's labour market figure Germany's ZEW survey and Canada's Manufacturing sales.
UK: This morning's labour market figures were on the slightly stronger side. The unemployment rate was in line with consensus, holding steady at 3.8%, but wage growth decelerated a touch less than expected, while employment growth picked up after slowing through the middle part of this year. The data is quite lagged though - these are Sept-Nov average figures - so this one monthly report will probably not be a big part of the BoE's decision. There's still enough weakness in other areas to justify a rate cut this month, although if the labour market were to remain this strong for the next few months, that would cast a lot more doubt on the second rate cut that we're looking for in May.
Germany's ZEW survey was stronger than expected, with the current situation improving from -19.9 to -9.5 (mkt -13.5), and expectations from 10.7 to 26.7 (mkt 15.0), reaching their highest level since July 2015. This was reportedly due to the easing of US-China trade tensions, and the hope that the negative impact on Germany will begin to ease. Though German growth is still expected to remain below average.
Canadian Manufacturing sales surprised slightly to the downside in November with a 0.6% m/m drop (market: -0.5%), with a large rebound in auto parts preventing an even larger pullback; ex-transport shipments were down 1.7%. Part of the weakness was attributed to the CN rail strike that contributed to an 11.7% drop in primary metals. Manufacturing volumes fell by 0.8% which implies a modest headwind to industry-level GDP for November, although we continue to track Q4 growth near 0.5%.