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Global Economics will be taking the next week off. Happy Thanksgiving from Econoday!
Global economic data on net have been flat, showing at most only marginal lift from this year's run of central-bank rate cuts. Yet internal domestic demand underpinned by strong labor markets remains the global economy's biggest plus, offsetting what has been a mostly unfavorable year for manufacturers and cross-border trade. The latter and the usual spate of weakness is where we'll start this week's run down with the latest news out of Asia.
 Japan's merchandise trade balance posted a surplus of ¥17.3 billion in October, well short of the consensus forecast for a surplus of ¥335 billion. Exports (the red line in the graph) fell 9.2 percent on the year in October after dropping 5.2 percent in September, deeper than expectations for a drop of 7.5 percent; imports fell 14.8 percent on the year after dropping 1.5 percent previously. The yearly drop in Japan's exports is the eleventh in a row and is broadly in line with Chinese and, as we shall see, other data from Asia as well. Weakness was again broad-based across major trading partners. Japanese exports to China fell 10.3 percent on the year in October after dropping 6.7 percent in September; growth in exports to the US weakened from a drop of 7.9 percent to a fall of 11.4 percent, and exports to the European Union declined 8.4 percent after September's 0.4 percent dip.
 Japan isn't the only trade graph that's trending lower. Singapore's non-oil domestic exports fell 12.3 percent on the year in October after falling 8.1 percent in September. This is the seventh straight drop and no different than other regional data showing weakness in trade flows associated with global trade disputes. Electronics exports fell 16.4 percent on the year in October, while non-electronics exports fell 11.0 percent. On the year, exports were down 5.5 percent with China, down 10.5 percent with the US, down 13.2 percent with the European Union, and down 39.5 percent with Japan. These are steep rates of decline to say the least. Total imports fell 10.3 percent on the year after falling 4.8 percent previously.
 What contraction in cross-border trade appears to have meant so far for the global economy is reduction in the demand for goods, which is not good for manufacturers. Looking at the UK, the industrial trends report from the Confederation of British Industry painted another generally gloomy picture. At minus 26 percent, the headline orders balance was actually 11 percentage points less under water than October's 9-year low and a little firmer than market expectations, but it remained well below its long-run average and indicative of worryingly soft demand. Export orders, at minus 22 percent after minus 41 percent, followed a similar pattern. Past output, at minus 9 percent, declined at much the same pace as at the start of the quarter, primarily due to weakness in motor vehicles and metal products. Sluggish markets overseas, not to mention political uncertainty at home, continue to make for a more than problematic near-term outlook for the UK.
 The shape of the graph for CBI industrial trends in the UK isn't that much different from the slump underway for Canadian manufacturing sales. Following a 0.8 percent increase in August, sales in September fell 0.2 percent for the third decline in four months. Year-on-year, factory sales fell 0.7 percentage points deeper into contraction to minus 1.2 percent. The decline was led by petroleum and coal where sales fell 1.9 percent for the fourth straight decline. Also contributing to the monthly drop were motor vehicle parts sales, down 4.3 percent as some Canadian plants scaled back or stopped production at the end of September due to the United Auto Workers strike in the US. And further weakness is indicated by a 2.7 percent decline in new orders, mostly for aircraft but also ships where weakness contributed a 0.6 percent drop in unfilled orders. After a surge in the second quarter economy, the Bank of Canada is seeing what it expected: a slowdown.
 With sales and orders coming down, it should be no surprise that prices for industrial goods are coming down. October producer prices in Germany fell a steeper than expected 0.2 percent on the month, reducing the annual inflation rate by a further 0.5 percentage points to minus 0.6 percent, its lowest mark since September 2016. Weakness was concentrated in intermediates, where prices declined a monthly 0.7 percent and were down 1.7 percent on the year. Looking at finished goods, capital and durable consumer goods managed fractional gains while consumer non-durables were 0.2 percent higher. When excluding energy the story is no better, falling 0.2 percent on the month like the headline and shaving two ticks off underlying annual growth where the rate now stands at just 0.3 percent.
 Though producer price reports from many countries, including the US and China, have been in a clear slump, prices at the consumer level have held up better. In Canada, they've been right on target. A 0.3 percent monthly rise left the annual rate for consumer inflation unchanged for the third month in a row at 1.9 percent, only a tenth below the Bank of Canada's target. Excluding food and energy, prices rose 0.5 percent on the month with the annual rate right at 2.0 percent. Weakness in energy prices eased in October while excluding gasoline, consumer prices were up 0.4 percent on the month and 2.3 percent annually. Main contributors to the annual inflation rate were mortgage interest costs (up 7.0 percent year-on-year), passenger vehicle insurance premiums (up 9.0 percent) and rent (up 3.7 percent). Inflation that's steady and on target may well help the Bank of Canada, in contrast to other central banks, continue to resist pressures to lower rates.
 Not resisting pressure at all to lower rates or doing whatever else they can to stimulate activity, the Bank of Japan got a little better news on inflation. The BoJ's preferred measure of underlying inflation, CPI excluding fresh food and energy prices, managed a 0.7 percent on the year gain in October, up from 0.5 percent in September. For the BoJ, this improvement may pass as favorable momentum but nevertheless is a reminder that reaching the 2 percent inflation target remains a slow process. The headline index was up only 0.2 percent on the year in October remaining at its lowest level since February. On the month, the overall index was unchanged as it has been in six of the last eight months.
 It's hard to overstate the importance that the monthly purchasing managers indexes have on economic policy in Europe. The European Central Bank, in the minutes of last month's meeting, cited the PMIs as key indicators for the manufacturing sector. And based on November's flash results, the bank still has plenty to worry about. Eurozone's manufacturing PMI did improve, up 7 tenths to 46.6 in November's flash and led in part by France at 51.6 but with Germany still lagging far in the distance, but a little less so at 43.8 for a nearly 2 point improvement. Whether manufacturing can find its feet is still in question just as Europe's service sector may be losing its balance. The Eurozone's services flash fell 7 tenths to 51.5 and a 10-month low. Aggregate new orders between the samples fell for a third straight month despite a modest gain in services where demand is nevertheless at a six-year low. Backlogs decreased for an eleventh time in the past year and at one of the steepest rates seen in the last five years. Employment growth slowed for the fifth consecutive month and to its weakest rate since January 2015. Expectations about future output remained subdued but, in a positive, did improve perhaps getting some support from the ECB's stimulus package announced in September.
 One of the brightest spots is coming (where many have been waiting all along) from the US housing sector which is getting a boost from favorable mortgage rates and high levels of employment. There was plenty of positive housing news in the week including a strong showing for resales as well as especially strong showings for housing starts and permits. October starts came in at a 1.314 million annual rate in October which outside of August's 1.386 million is the strongest showing since May last year. Permits are the big positive, well above expectations at 1.461 million for the strongest rate since the housing bubble. Yet, as seen in the graph, this is still far under the more than 2 million annual peak in 2006, a subprime bubble whose bursting not only triggered the Great Recession but pulled forward building activity and has made for slow housing growth this cycle. But history aside, 3-month averages for the key single-family category confirm the ongoing strength. Starts are running at a 923,000 rate on the average which is another cycle high and up sharply over the last two months. Single-family permits are at an 888,000 rate which is likewise pivoting higher and also the strongest in 12 years. Another major plus in the report is a 10.3 percent surge in housing completions to a 1.256 million, offering immediate supply and a further boost to the new home market. The housing sector broke out its year-and-a-half slump last quarter and looks to be breaking out further so far this quarter. Low mortgage rates and high levels of employment are two very strong positives for housing where emerging strength will help offset extending weakness in the global economy and US manufacturing.
 Consumer strength in fact is the big hope for the US economy. Employment has been holding the consumer up and supporting consumer confidence, which based on the consumer sentiment report continues to recover from a tariff-related scare in August when, during a breakdown of US-China trade negotiations, the index plunged 10 points to below 90 as tracked by the red line in the graph. The index has since recovered most of that back and at 96.8 in November posted the best score since July. Expectations led the latest report and likely reflect confidence in future income. Not contributing to November, however, were current conditions which edged lower and are not pointing to consumer momentum going into holiday shopping. It's interesting to note that impeachment proceedings have yet to skew results, but the report does cite increasing polarization among the sample, with one side anticipating recession and the other uninterrupted expansion. Yet polarized or not, the results are solid and will likely lift expectations for the coming week's consumer confidence data from the Conference Board which, as tracked in the blue columns of the graph, have been on a two-month slide.
 Another factor helping the US consumer, though one whose specific effects are difficult to isolate, is heavy government spending, reflected in the US deficit which is deepening at a roughly 30 percent annual rate. Government stimulus has been generally less aggressive elsewhere but may also be on the rise in the UK. Public sector net borrowing was higher than expected in October, at £10.51 billion for a nearly 28 percent increase from the same month in 2018. Underlying borrowing for the fiscal year to date ending in March, stands at £46.3 billion, a £4.3 billion increase from the same period in the prior fiscal year. A 2.1 percent drop in corporate tax receipts, the steepest since 2011, is a key factor here and underlines the threat that stalling economic growth may have on any efforts to keep borrowing under control. That said, current spending proposals from both the Conservatives and the Labour Party suggest that fiscal discipline has all but gone out the window anyway. Whichever party wins the December election, government borrowing is set to climb sharply.
 The ability of the US to accelerate any fiscal stimulus would seem to be limited if nothing else by how steeply the government's deficit has already been climbing. This possible lack of available firepower, however, is offset by plenty of range left for monetary policy as the Federal Reserve's 1.625 percent overnight policy rate is far above those of other central banks. This is reflected in long rates which for the US are also higher than others. The US 10-year yield has been holding at about 1.75 percent and, despite falling about 80 basis points so far this year, remains well above Australia's 10-year rate of 1.10 percent which has also been falling. How much lower long rates in Australia can go, down from 2.30 percent at the beginning of the year, may well be tied to how much lower the Reserve Bank of Australia's policy rate will go. But at 0.75 percent, the RBA hasn't been taking any chances with economic slowing and started cutting rates earlier then the Fed, though both banks are now neck and neck with both having made three 25-basis-point cuts this year. The Bank of England's policy rate is also at 0.75 percent and hasn't been changed since last year. The risk of higher government spending in the UK may not be a positive for gilts though gilts have been in demand with the 10-year yield down 40 basis points this year to 0.70 percent. German bunds, despite negative yields, have also been in demand with the 10-year yield falling 50 basis points year to date to minus 35 basis points. The European Central Bank's policy rate has long since been at zero, for the last 3-1/2 years, which is about as long as the Bank of Japan, as part of its stimulus efforts, has been keeping the 10-year JGB at zero or below, at minus 0.10 percent at last count. If the global economy does continue to slow and with that, take down growth in the US, Australia, and the UK, it will be worth watching whether long term yields in these countries follow suit and make their way lower toward bunds and JGBs.
The cost of money has been cheap this economic cycle and may be getting even cheaper if global central banks keep lowering rates or begin increasing the amount of bonds they buy in the market. This of course will depend on the path of economic growth where the latest indications, despite disputes and contraction in trade, are perhaps getting no worse, or are at least not pointing to further slowing for now. And who gets the credit for this limited success? Central banks, through their aggressive policies, may well deserve the most.
**Jeremy Hawkins and Brian Jackson contributed to this article
For the US, another set of flat consumer confidence readings on Tuesday and poor results for durable goods orders on Wednesday could heat up expectations for another Federal Reserve rate cut. Yet unexpectedly strong readings, in contrast, could push back those expectations and raise talk of year-end acceleration for the economy. For Europe, economic sentiment is at a multi-year low and will lead Thursday's global calendar ahead of consumer prices including data from Germany, France, and the Eurozone where another round of subdued results is the call. Japanese industrial production will be posted on Friday as will Japanese retail sales which are likely to show another month of consumption-tax distortions. GDP data from India, coming off a six-year low, will also be posted on Friday as will GDP from Canada, one of the few countries where monetary policy, because of economic strength, has been on hold. But the week isn't over until Saturday when China will post the official CFLP manufacturing PMI for November, an index that has been in marginal contraction for six straight months.
German Ifo Economic Sentiment for November (Mon 09:00 GMT; Mon 10:00 CET; Mon 04:00 EST)
Consensus Forecast: 95.0
For November, German economic sentiment is expected to improve to 95.0 versus 94.6 in October which was unchanged from September and a seven-year low.
Germany: GfK Consumer Climate for December (Tue 07:00 GMT; Tue 08:00 CET; Tue 02:00 EST)
Consensus Forecast: 9.6
No change is the call for December's Gfk survey which in November fell 3 tenths to 9.6 and a 3-1/2 year low.
US International Trade In Goods for October (Tue 13:30 GMT; Tue 08:30 EST)
Consensus Forecast, Month-to-Month Change: -$70.0 billion
Forecasters see slight narrowing for the October goods trade gap, at a consensus $70.0 billion versus $70.5 billion in September (revised from an initial $70.4 billion). Both exports and imports in September showed monthly and year-to-date contraction.
US New Home Sales for October (Tue 15:00 GMT; Tue 10:00 EST)
Consensus Forecast, Annualized Rate: 707,000
New home sales pivoted higher beginning in June and extended their run to September, lifting the 3-month average to a 12-year high. Econoday's consensus for October's annual sales rate of new homes is 707,000 versus 701,000 in September.
US Consumer Confidence Index for November (Tue 15:00 GMT; Tue 10:00 EST)
Consensus Forecast: 126.8
The consumer confidence index ratcheted 10 points lower in September and failed to recover in October. For November's index, Econoday's consensus is a nearly 1 point gain to what would still be a flat 126.8.
US Durable Goods Orders for October (Wed 13:30 GMT; Wed 08:30 EST)
Consensus Forecast, Month-to-Month Change: -0.7%
Ex-Transportation Orders
Consensus Forecast: 0.2%
Core Capital Goods Orders (nondefense ex-aircraft)
Consensus Forecast: 0.1%
Following broad weakness in September, durable goods orders are expected to extend their decline in October, at a consensus decrease of 0.7 percent. Excluding transportation equipment, orders are expected to increase a modest 0.2 percent. Core capital goods orders have been very weak and are not expected to show much improvement, at a consensus increase of only 0.1 percent.
US Personal Income for September (Wed 15:00 GMT; Wed 10:00 EST)
Consensus Forecast, Month-to-Month Change: 0.3%
Consumer Spending
Consensus Forecast, Month-to-Month Change: 0.3%
Core PCE Price Index
Consensus Forecast, Month-to-Month Change: 0.2%
Core PCE Price Index
Consensus Forecast, Year-on-Year Change: 1.7%
Growth in income and spending was soft in September as were the PCE inflation readings, all consistent with a moderate to flat rate of general economic growth. For October, personal income is expected to rise a moderate 0.3 percent with consumer spending also seen up 0.3 percent. After no change in August, core PCE prices are expected to rise 0.2 percent with the year-on-year core holding unchanged at 1.7 percent.
Eurozone: EC Economic Sentiment for November (Thu 10:00 GMT; Thu 11:00 CET, Thu 05:00 EST)
Consensus Forecast: 100.8
In the worst showing in nearly five years, the European Commission's economic sentiment index fell 0.6 points to what was a lower-than-expected 100.8 in October. For November, the consensus is for no recovery at 100.8.
German Preliminary CPI for November (Thu 13:00 GMT: Thu 14:00 CET; Thu 08:00 EST)
Consensus Forecast, Month-to-Month: -0.6%
Consensus Forecast, Year-over-Year: 1.2%
After a 0.1 percent monthly gain in October, a sharp decrease of 0.6 percent is the monthly expectation for preliminary consumer prices in November. Yet year-on-year, German consumer prices are expected to firm slightly, to plus 1.2 percent versus October's 1.1 percent.
Japanese Industrial Production for October (Thu 23:50 GMT: Fri 08:50 JST; Thu 18:50 EST)
Consensus Forecast: -2.1%
Industrial production in Japan has been up and down and is expected to fall a monthly 2.1 percent in October. Production in September, up a monthly 1.4 percent, got an indirect boost from forward buying by consumers ahead of an increase in consumption taxes.
Japanese Retail Sales for October (Thu 23:50 GMT: Fri 08:50 JST; Thu 18:50 EST)
Consensus Forecast, Year-over-Year: -4.4%
Retail sales are expected to fall a year-on-year 4.4 percent in October after beating expectations in September at plus 9.1 percent that reflected, however, forward buying ahead of an increase in consumption taxes.
French Consumer Manufactured Goods Consumption for October (Fri 07:45 GMT; Fri 08:45 CET; Fri 02:45 EST)
Consensus Forecast, Month-to-Month: 0.4%
Consumer manufactured goods consumption is expected to rise a month-to-month 0.4 percent in October versus an unexpectedly sharp 0.6 percent decline in September that was pulled down by lower car sales.
French CPI, Preliminary November (Fri 07:45 GMT; Fri 08:45 CET; Fri 02:45 EST)
Consensus Forecast, Month-to-Month: 0.0%
Consensus Forecast, Year-over-Year: 1.1%
The CPI for preliminary November is expected to come in unchanged for what would be a subdued year-on-year increase of 1.1 percent. Consumer prices in France have been trending lower.
Switzerland: KOF Swiss Leading Indicator for November (Fri 08:00 GMT; Fri 09:00 CET; Fri 03:00 EST)
Consensus Forecast: 95%
The KOF Swiss leading indicator is expected to rise to 95 percent in November after rising sharply in October to 94.7 percent which was, however, still near multi-year lows.
German Unemployment Rate for November (Fri 08:55 GMT; Fri 09:55 CET; Fri 03:55 EST)
Consensus Forecast: 5.0%
Germany's unemployment rate is expected to hold steady in November at 5.0 percent. Vacancies have come down for seven months in a row in a sign of weakening demand for labor.
Eurozone HICP Flash for November (Fri 10:00 GMT; Fri 11:00 CET; Fri 05:00 EST)
Consensus Forecast, Year-over-Year: 0.9%
Eurozone Underlying HICP Flash
Consensus Forecast, Year-over-Year: 1.1%
Eurozone inflation is expected to move higher in November, to a year-on-year consensus of 0.9 percent versus 0.7 percent in October. November's key (narrow) core rate is expected to come in at 1.1 percent.
Eurozone Unemployment Rate for October (Fri 10:00 GMT; Fri 11:00 CET; Fri 05:00 EST)
Consensus Forecast: 7.5%
The unemployment rate in the Eurozone is expected to come in at 7.5 percent in October, which would be unchanged from September.
Indian GDP, Third Quarter (Fri 12:00 GMT; Fri 17:30 IST; Fri 07:00 EST)
Consensus Forecast, Year-over-Year: 4.7%
Forecasters see third-quarter GDP coming in at year-on-year growth of 4.7 percent versus 5.0 percent in the second quarter which was the fourth straight quarter of slowing and the weakest showing in more than six years.
Canadian GDP for Third Quarter (Fri 13:30 GMT; Fri 08:30 EST)
Consensus Forecast, Annualized: 1.4%
A 1.4 percent annualized growth rate is the consensus for third-quarter GDP versus 3.7 percent in the second quarter which was stronger than expected and benefited from a jump in energy exports.
China: CFLP Manufacturing PMI for November (Sat 01:00 GMT; Sat 09:00 CST; Fri 20:00 EST)
Consensus Forecast: 49.5
The CFLP manufacturing PMI in November is expected to show little change, at a consensus 49.5 versus October's 49.3 which was slightly lower than expected and the sixth straight reading under breakeven 50.
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