Euro zone services PMIs and German industry orders data will offer the latest snapshot of the currency bloc’s economy which the European Commission now forecasts will contract by 0.4 percent this year and grow just 1.1 percent in 2014 – hardly escape velocity, in fact barely taxiing along the runway.
We know from flash readings for the euro zone and Germany that service activity expanded but at a slower rate last month. France’s reading crept back into expansionary territory for the first time since early 2012. Any revisions to those figures will be marginal leaving the focus more on Italy and Spain for which we get no preliminary release.
Italy’s service sector has been growing of late, according to the PMIs, while Spain’s has still been shrinking though at a slower pace. German industry orders posted a surprise 0.3 percent drop in August and are forecast to have grown by 0.5 percent in September.
That is what faces the European Central Bank when it discusses policy on Thursday. Together with a strong euro, record unemployment and evaporating inflation, reasons to ease are manifold. But the odds are that it won’t happen yet with policymakers saying they see no threat of deflation (the inflation rate plunged to 0.7 percent last month).
Action, if it comes, is anyway more likely at the December meeting when the central bank will produce fresh growth and inflation forecasts. Expect no more than verbal intervention this week.