Introduction

Key data in the week were posted in China, where tariffs continue to pull down trade, and also Germany where the industrial sector now appears to be in recession. After steady showings over the past ten years, global growth may be at risk of cyclical closure. Within this greater cycle, more immediate cycles have taken form; paths starting at the zero line several years ago, then peaking, and now at closure or already in contraction. For economic policy makers, the task is to extend and lift growth rates despite a stubborn host of obstacles, obstacles that may explain a dovish crack of daylight now apparent at the Bank of England.

The economy

Monetary policy

The Bank of England's Monetary Policy Committee again opted to leave policy on hold at its November meeting. Bank Rate was held unchanged at 0.75 percent and the quantitative easing ceiling at £445 billion with the share of gilts pegged at £435 billion. But there was definitely a surprise as Michael Saunders and Jonathan Haskel, in the first call for lower rates since August 2016, both voted for a 25 basis point cut to 0.50 percent. Even though these votes reinforce the market's view that the next move in borrowing costs will be down, the committee held its policy bias unchanged toward a future rate hike, not rate cut. The committee's guidance continues to be based on a smooth Brexit and requires some recovery in the global economy. That said, the underlying assumptions have been modified to incorporate Boris Johnson's newly agreed withdrawal deal with the European Union which is seen opening the door to a Canada-style free trade arrangement: no tariffs on UK-EU trade, some barriers to services trade, and the introduction of customs checks. Brexit details aside, the fissure between rate-cut votes and rate-hike bias may well increase the scope for volatility in UK asset prices over the coming weeks and months.

The Reserve Bank of Australia, like the Bank of England, also left its policy rate unchanged in the week at the 0.75 percent level. But unlike the BoE, the RBA's decision follows cuts of 25 basis point rates in May, June, and October. The outlook for the global economy remains "reasonable", according to the statement which again cautioned that risks are biased to the downside, citing uncertainty caused by global trade and technology disputes. Officials retained their view that the Australian economy, now gradually emerging from a soft patch, has likely reached "a gentle turning point" and forecast GDP growth at around 2.25 percent this year and at around 3.0 percent in 2020, with activity supported by low interest rates, recent tax cuts, and higher infrastructure spending. Prospects for household consumption, however, were again cited as the main domestic uncertainty. The assessment of the labour market played a major role in the prior rate cuts and, according to the bank's quarterly monetary policy statement which was issued later in the week, a further decline in the unemployment rate, currently steady at around 5.25 percent, is "increasingly clear". This would officials believe help generate wage growth consistent with achieving the bank's 2.0 percent inflation target (Australia's CPI was running at 1.7 percent in the third quarter). Though making no changes at the latest meeting, RBA officials said it is "reasonable to expect" that policy rates will stay low for an "extended period" and advised they are prepared to ease policy further if required.

International trade

China's merchandise trade was posted on Friday and was perhaps the week's biggest economic news. The data clearly show the deep and extending effects that tariffs between the US and China are having on trade flows, effects that are largely masked at the headline level. China's trade surplus in October rose more than $3 billion to $42.81 billion in the month in what will be a plus for the country's GDP, though both exports and especially imports posted sharp yearly contraction, at 0.9 percent for the former and 6.4 percent for the latter. Trade with the US continues its collapse, contracting 16.2 percent for exports compared to October last year and 14.4 percent for imports as tracked in the accompanying graph. These readings have been in contraction for most of the last year, especially imports which is not good news for US exporters. Daily headlines on the ups and downs of ongoing trade negotiations have been behind daily swings in global stock markets, though expectations for an amicable settlement appear to have been building since talks broke down in August. Tariffs, initiated by the US last year, have been tit-for-tat, ranging from 10 to 30 percent for most goods traded by the two nations.

Industrial production

Another key report in the week was also unfavorable as goods production in Germany continues its contraction, down 0.6 percent in September for annual contraction, as depicted in the graph, of minus 4.4 percent. The latest monthly decline was broad-based and would have been steeper still but for gains in construction and energy. Manufacturing production, which excludes these categories, slumped a monthly 1.3 percent as intermediates also fell 1.3 percent, capital goods 1.5 percent and consumer goods 0.5 percent. September's results leave third quarter industrial production 1.1 percent below its level in the second quarter when it contracted an even sharper 1.7 percent versus the first quarter. This officially puts the sector into technical recession and probably paves the way for the overall Eurozone to follow suit when aggregate production data are released this coming Wednesday.

Yet there was also good news from Germany, at least good news for the ongoing quarter if not the third quarter. Manufacturing orders were, in contrast to manufacturing production, surprisingly strong in September. Orders jumped a monthly 1.3 percent for their first increase since June. However, at minus 5.3 percent, annual growth as tracked in the graph remained deep in negative territory, albeit up from August's minus 6.5 percent. The monthly headline gain was led by capital goods which climbed 3.1 percent, supported by a smaller rise for consumer goods and offsetting contraction for intermediates. Domestic demand posted a 1.6 percent monthly advance, only its third gain year to date, while the overseas market expanded 1.1 percent, compounding a 0.7 percent rise last time. Nonetheless, despite September's stronger than anticipated performance, weakness earlier in the quarter sealed a 1.1 percent quarterly decline for overall orders.

International trade

Good news from Germany was also found in the merchandise trade report. September's surplus stood at €19.2 billion in September, up from €18.7 billion in August and its second best showing since March. The monthly improvement reflected expansion on both sides of the balance sheet: exports rose 1.5 percent on the month, their fourth advance in the last five months, while imports gained 1.3 percent for their first back-to-back increase in eight months. Annual export growth picked up from minus 3.6 percent to plus 4.6 percent, a 4-month high as seen in the dark green column at the far right of the graph. If exports can extend this increase, the outlook for Germany's industrial sector would certainly improve. Turning to imports, annual change climbed from minus 3.0 percent to plus 2.3 percent, also the strongest performance since May. September's report puts Germany's third quarter trade surplus at €19.3 billion, a nearly 7 percent increase versus the second quarter when net exports subtracted 0.5 percentage points from GDP.

Purchasing Managers Indexes

We'll wind up the week with several purchasing managers indexes, none of which unfortunately are very promising. The UK, as highlighted by the BoE, is going through a period of unusual uncertainty which is proving itself a negative for the construction sector. The construction PMI had another poor month in October, at 44.2 the index was up from September but also only 1.1 points above June's decade-low. Civil engineering was the worst performer, falling at its sharpest pace in 10 years. House building saw its steepest slide in over three years while commercial construction fell for the tenth month running. Aggregate new orders contracted for a seventh straight month (though at the slowest pace since July) as clients continued to defer new projects due to political uncertainty and concerns about the economic outlook. Softer demand was reflected in another reduction in staffing levels, extending the trend decline that began back in April. Business sentiment remained near a seven year low and input cost inflation at a 3-1/2 year low.

Singapore's PMI battle at the 50 line seems to have been lost, at least for now. The index, which had been above 50 as recently as July, fell from 48.3 in September to 47.4 in October, its lowest level since August 2012. Output fell in October at the sharpest pace on record with the survey's measures of new orders falling to their lowest level since May 2015. New export orders and employment also fell to multi-year lows with the 12-month outlook subdued and respondents reporting the biggest cut in selling prices in more than two years. Though the Monetary Authority of Singapore forecast, at their semi-annual policy meeting last month, that the nation's economy would pick up "modestly" in 2020, they also announced a slight easing of policy by targeting a slightly slower pace of appreciation for the Singapore dollar.

Singapore's PMI may be below the 50 line but Hong Kong's is now below 40, falling to 39.3 in October from 41.5 in September. This is the lowest reading since the Great Recession in November 2008 and again signals sharp contraction underway in the Hong Kong economy. Ongoing US-China trade tensions and weaker external demand remain key factors weighing on domestic activity, as does serious civil unrest in Hong Kong which is also continuing to play a major role in the further worsening of conditions. Output in October fell at the sharpest rate in the survey's 21-year history, while new orders fell at the sharpest rate in 10 years, largely reflecting weaker demand from mainland China. Respondents reported a small increase in payrolls after falls in each of the two previous months, though the survey's measure of business confidence fell to a new low. Input costs rose for the first time in four months but firms reported cutting their selling prices for the fourth consecutive month.

Markets: Hang Seng won't be held back

However bad the economic news coming out of Hong Kong, it hasn't been hurting the Hang Seng. Despite October's PMI, the Hang Seng rose an outstanding 2.0 percent in the week which follows the prior week's 1.6 percent gain when news of a second straight contraction in quarterly GDP (yes, the definition of recession) had no visible effect on the index. Could the Hang Seng's rally, now at 7.0 percent year-to-date, reflect emerging optimism over resolutions to civil unrest and trade disputes? Though not as dire as Hong Kong, economic data out of Singapore have been slowing. Yet the Straits Times index is doing respectably well, up 6.4 percent year-to-date with the week's latest gain at 1.1 percent in what is another highlight for the region. Showing understandable easing, Bombay's Sensex still managed a 0.4 percent increase on top of the prior week's 2.8 percent surge. Like elsewhere, economic indications have been slowing in India but the week's big news wasn't data but the government's decision not to enter the Asia-Pacific trade agreement. The deal, according to the government, would have increased imports of agricultural goods from Australia and New Zealand and consumer goods from China at the expense of domestic farmers and local businesses. Amid wide contraction in trade, this one decision pretty much sums up this year's global theme.

The bottom line

Germany's industrial production data will be followed in the coming week by production updates from both China and the US, data that are certain to be the focus of policy makers if not always the financial markets. The decline underway in global trade means falling cross-border demand for manufactured goods, and unless this demand is being replaced by rising internal demand for goods, industrial production reports across the global economies may well get worse before they get better.

**Jeremy Hawkins and Brian Jackson contributed to this article

Week of November 11 to November 15

The global economy will get a serious update in the coming week headlined by production data from the sector that is bearing the brunt of the slowdown in trade. Both China on Thursday and the US on Friday will post their October industrial production reports, with China expected to slow and the US expected to extend September's contraction. September data on industrial production will fill up the first half of the week including reports from the UK, Italy, India and also the Eurozone where deepening contraction in Germany, and the risk of industrial recession, was a headline of the prior week. So far the slowdown in trade has had only a limited impact on consumer sectors with US retail sales on Friday expected to show respectable strength, much like China where retail sales will be posted Thursday amid expectations for steady growth. Other data to watch include preliminary GDP reports from the UK on Monday and Japan on Wednesday, ZEW business expectations from Germany on Tuesday and a policy announcement from the Reserve Bank of New Zealand on Wednesday where a rate cut may be in the cards. US consumer prices, where subdued results are expected, will be posted on Wednesday.

Japanese Machine Orders for September (Sun 18:50 EST; Sun 23:50 GMT; Mon 08:50 JST)

Consensus Forecast, Month-to-Month: 1.6%

At a month-to-month 1.6 percent, forecasters see Japanese machine orders firming in September following August's as-expected monthly decline of 2.4 percent. Both manufacturing and non-manufacturing orders fell in August.

Italian Industrial Production for September (Mon 04:00 EST; Mon 09:00 GMT; Mon 10:00 CET)

Consensus Forecast, Month-to-Month: -0.4%

Consensus Forecast, Year-over-Year: -2.0%

Industrial production in August, at 0.3 percent, posted its first monthly increase since May in a report that showed gains for consumer and capital goods. Minus 0.4 percent is the monthly forecast for September with year-on-year change seen at minus 2.0 percent versus August's minus 1.8 percent.

UK Preliminary Third-Quarter GDP (Mon 04:30 EST; Mon 09:30 GMT)

Consensus Forecast, Quarter-to-Quarter: 0.4%

Consensus Forecast, Year-over-Year: 1.1%

Pulled down by a Brexit-related inventory draw, second-quarter GDP contracted 0.2 percent on a quarterly basis but was up 1.3 percent year-on-year (revised from 1.2 percent). The consensus for third-quarter GDP is a 0.4 percent monthly increase for a yearly growth rate of 1.1 percent.

UK Industrial Production for September (Mon 04:30 EST; Mon 09:30 GMT)

Consensus Forecast, Month-to-Month: -0.2%

Consensus Forecast, Year-over-Year: -1.3%

Manufacturing Production

Consensus Forecast, Month-to-Month: -0.3%

Consensus Forecast, Year-over-Year: -1.6%

Forecasters are calling for a 0.2 percent monthly decrease in September industrial production and a 0.3 percent dip for the manufacturing component. August, at minus 0.6 percent overall and minus 0.7 percent for manufacturing, was a weak month for this report also reflected in annual rates, at minus 1.8 percent and minus 1.7 percent respectively.

Indian Industrial Production for September (Mon 07:00 EST; Tue 12:00 GMT; Tue 17:30 IST)

Consensus Forecast, Year-over-Year: -2.2%

Forecasters see September industrial production falling a year-on-year 2.2 percent versus minus 1.1 percent in August which was the worst showing for India's production since June last year.

UK Labour Market Report for October (Tue 04:30 EST; Tue 09:30 GMT)

Consensus Forecast, Claimant Count: 17,800

Consensus Forecast, ILO Unemployment Rate: 3.9%

Consensus Forecast, Average Weekly Earnings Y/Y: 3.8%

UK claimant count is seen increasing 17,800 in October versus a cooler-than-expected 21,100 rise in September. The ILO unemployment rate is expected to hold unchanged at 3.9 percent with the call for average hourly earnings, which eased back in September, also seen unchanged, at 3.8 percent year-on-year.

Germany: ZEW Survey for November (Tue 05:00 EST; Tue 10:00 GMT; Tue 11:00 CET)

Consensus Forecast, Business Expectations:  -16

Pessimism has been heavy among Germany's ZEW respondents as October business expectations showed no improvement, at minus 22.8 versus minus 22.5 in September. But for November improvement is the call, at a consensus minus 16.

Japanese Producer Price Index for October (Tue 18:50 EST; Wed 23:50 GMT; Wed 08:50 JST)

Consensus Forecast, Month-to-Month: 1.1%

Consensus Forecast, Year-over-Year: -0.4%

Producer prices in Japan were unchanged on the month in September though the year-on-year rate fell 2 tenths to minus 1.1 percent. For October, forecasters see plus 1.1 percent for the monthly rate and minus 0.4 percent for the yearly rate.

Reserve Bank of New Zealand Announcement (Tue 20:00 EST; Wed 03:00 GMT: Wed 14:00 NZDT)

Consensus Forecast, Change: -0.25 basis points

Consensus Forecast, Level: 0.75%

Citing stimulus from prior rate cuts and an increase in government spending, the Reserve Bank of New Zealand kept policy unchanged at their last meeting in September. But for November, a 25 basis point cut to 0.75 percent is the call.

UK CPI for October (Wed 04:30 EST; Wed 09:30 GMT)

Consensus Forecast, Month-to-Month: 0.0%

Consensus Forecast, Year-over-Year: 1.7%

The CPI held steady at 1.7 percent in September but remained below the Bank of England's 2 percent target. Expectations for October are looking for no change on the month and a repeat of the 1.7 percent yearly rate.

Eurozone Industrial Production for September (Wed 05:00 EST; Wed 10:00 GMT; Wed 11:00 CET)

Consensus Forecast, Month-to-Month: -0.3%

Consensus Forecast, Year-over-Year: -2.5%

Eurozone industrial production has been on the decline since late last year. The monthly consensus for September is a 0.3 percent decrease with the yearly consensus at minus 2.5 percent.

Indian CPI for October (Wed 07:00 EST; Wed 12:00 GMT; Wed 17:30 IST)

Consensus Forecast, Year-over-Year: 4.2%

Forecasters see India's CPI for October at a year-on-year 4.2 percent which would compare with 3.99 percent in September which was right at the mid-point of the Reserve Bank of India's 2.0 to 6.0 percent target.

US Consumer Price Index for September (Wed 08:30 EST; Wed 13:30 GMT)

Consensus Forecast, Month-to-Month Change: 0.3%

Consensus Forecast, Year-on-Year Change: 1.7%

CPI Core, Less Food & Energy

Consensus Forecast, Month-to-Month Change: 0.2%

Consensus Forecast, Year-on-Year Change: 2.4%

Consumer prices in the US cooled in September yet the core year-on-year rate, supported by positive showings for medical care and housing, held in at 2.4 percent. This rate is expected to hold unchanged in October with the monthly core seen at plus 0.2 percent versus September's 0.1 percent rise. Overall prices in September are expected to rise 0.3 percent on the month for a 1.7 percent gain on the year.

Japanese Advance Third-Quarter GDP (Wed 18:50 EST; Wed 23:50 GMT; Thu 08:50 JST)

Consensus Forecast, Quarter-over-Quarter: 0.2%

Consensus Forecast, Annualized: 0.8%

Advance GDP in the third quarter is expected to rise a quarterly 0.2 percent versus a final 0.3 percent in the final estimate for the second quarter (revised from 0.4 percent in the advance report). Japanese growth was pulled down in the second quarter by non-residential investment and net exports. Annual growth in the third quarter is seen at 0.8 percent versus a final 1.3 percent in the second quarter.

Australian Labour Force Survey for October (Wed 19:30 EST; Thu 00:30 GMT; Thu 11:30 AEDT)

Consensus Forecast, Unemployment Rate: 5.3%

Consensus Forecast, Employment: 18,000

Consensus Forecast, Participation Rate: 66.1%

Employment growth slowed by 20,000 in September to 14,700 though the unemployment rate did fall 1 tenth to 5.2 percent. For October, employment is expected to rise 18,000 with the unemployment rate seen at 5.3 percent and the participation rate at 66.1 percent.

Chinese Fixed Asset Investment for October (Wed 21:00 EST;  Fri 02:00 GMT;  Fri 10:00 CST)

Consensus Forecast, Year-to-date: 5.4%

Supported by wide stability among components including manufacturing and mining, fixed asset investment rose an as-expected 5.4 percent year-to-date in September but down from 5.5 percent in August. Forecasters see October fixed asset investment holding at 5.4 percent.

Chinese Industrial Production for October (Wed 21:00 EST; Thu 02:00 GMT; Thu 10:00 CST)

Consensus Forecast: 5.4%

Led by mining and manufacturing, growth re-accelerated strongly in September to what was a far greater-than-expected 5.8 percent year-on-year pace in September. Forecasters see slowing for October with the consensus at 5.4 percent.

Chinese Retail Sales for October (Wed 21:00 EST; Thu 02:00 GMT; Thu 10:00 CST)

Consensus Forecast, Year-over-Year: 7.8%

Improvement in auto sales helped underpin Chinese retail sales in September which in October are expected to rise at a 7.8 year-on-year pace. This would be unchanged from September's sales pace.

German GDP Third-Quarter Flash (Thu 02:00 EST; Thu 07:00 GMT; Thu 08:00 CET)

Consensus Forecast, Quarter-on-Quarter: -0.1%

The flash estimate for third-quarter GDP is quarter-on-quarter contraction of 0.1 percent, which would be unchanged from the second quarter and signal marginal recession.

Eurozone Merchandise Trade Balance for September (Fri 05:00 EST: Fri 10:00 GMT; Fri 11:00 CET)

Consensus Forecast: €17.5 billion

After a healthy surplus of €20.3 billion in August, forecasters see Eurozone's trade surplus easing slightly to €17.5 billion. Despite improvement in the surplus, both sides of the ledger were in negative year-on-year ground in August, at minus 4.1 percent for imports and minus 2.2 percent for exports.

US Retail Sales for October (Fri 08:30 EST; Fri 13:30 GMT)

Consensus Forecast, Month-to-Month: 0.2%

Consensus Forecast, Ex-Autos: 0.4%

Consensus Forecast, Ex-Autos & Gas: 0.3%

Consensus Forecast, Control Group: 0.4%

Retail sales came in mostly flat in September but nevertheless didn't break this year's upward trend. Modest acceleration is the forecast for October where the consensus is looking for a 0.2 percent increase following September's 0.3 percent headline decline. Unit vehicle sales slowed sharply in October which may give a relative boost to ex-auto sales which are expected to rise a respectable 0.4 percent. Ex-autos & less gasoline are expected at a 0.3 percent gain with the control group up 0.4 percent.

US Industrial Production for September (Fri 09:15 EST; Fri 14:15 GMT)

Consensus Forecast, Month-to-Month: -0.4%

Consensus Forecast, Manufacturing Production: -0.5%    

Consensus Forecast, Capacity Utilization Rate: 77.2%

After a strong August, industrial production fell back more sharply than expected in September with year-on-year rates especially betraying the report's weakening trends. Manufacturing production, where contraction in vehicles and business equipment have been taking a toll, is expected to fall a monthly 0.5 percent in October with a 0.4 percent decrease expected for overall industrial production. Capacity utilization is expected to decrease 3 tenths to 77.2 percent.