The Week Ahead: focus on US presidential election and Euro zone industrial production data

In the USA, the focus over the next week will be on the outcome of the US presidential election on Tuesday November 8.

While a few weeks ago the democratic candidate Hillary Clinton was considered certain to win, the FBI announcement that it is investigating new emails related to Democratic nominee Hillary Clinton increased the Donald Trump’s chances of winning the US presidential election.

According to some polls, for example the ABC News/Washington Post tracking poll, the republican candidate Donald Trump is leading Clinton for the first time since May. The uncertain outcome of the US presidential election could weigh on the financial markets over the next few days.

On the data front, the most important data due for release next week is the preliminary of the November University of Michigan consumer confidence index (Friday November 11). Following the unexpected decline from 91.2 to 87.2 in October, the index should remain almost unchanged at 87.0 according to consensus estimate. The positive trend of the labor market should have a limited impact on consumer confidence as wages increases (+2.6% y/y in September) are still moderate. The index would anticipate a modest growth of consumer spending at year-end, contrary to the more positive indication coming from the Conference Board consumer confidence, which is close to the highest since 2007.

In the Euro zone, during the next week the focus will be on the industrial production data for September in all the major countries.

In Germany, following the strong increase in August, respectively at 1.0% and 2.5% m/m, we expect both factory orders and industrial production to soften. Factory orders (Monday, November 7) should decline by 1.0% m/m and rise by 2.4% y/y and industrial production (Tuesday, November 8) should fall by 0.9% m/m and rise by 1.6% y/y.


Following the strong increase in August, also French and Italian production data (both due on Thursday, November 10) are expected to soften. In France, industrial production should decline by 1% m/m (-0.7% y/y) and in Italy by 0.7% m/m (+1.9% y/y).

Despite the negative results in September, we continue to expect an improvement of economic activity in Q4 ’16, in line with latest business confidence indices. Following the 0.3% q/q expansion in Q3, we estimate that GDP growth could accelerate to 0.4/0.5% q/q in Q4, higher than Bloomberg consensus estimate of 0.3% q/q.

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