The look ahead: Is the US economy just taking a breather?


In the week ahead: The European Commission releases data on several indicators that will help investors assess whether the EU is beginning to move past its troubles. Data on US employment could indicate whether the job market is taking a breather. And a proposed new standard on revenue recognition will be the topic of a round table in Japan

European unemployment, retail sales, GDP

The European Commission releases unemployment figures Monday; retail sales figures will follow on April 5th. Both could offer insight about consumer spending, an important driver of EU economies. The region’s unemployment rate had been creeping up since mid-2009 and reached a record high 10.7% in January. Germany, France, Italy, Spain and Portugal contributed to the increase.

Gross domestic product in the EU had been declining since last summer and contracted in the fourth quarter based on fiscal tightening and a drop in private consumption. The EC’s Eurostat will release revised GDP estimates for the fourth quarter on Tuesday.

Retail sales provided a surprising bright spot for January. They rose slightly despite rising unemployment. February retail sales figures, due on April 5th, will show whether consumer demand in the EU continued to exceed expectations.

But first clues for February are not promising. Markit Economics released February data for the PMI manufacturing index and the PMI services index, which suggested the euro zone’s  manufacturing and services industries continued to struggle. March data for the PMI manufacturing index comes out Monday and for the PMI services index on April 4th.

US breather?

On April 6th, the US Bureau of Labor Statistics will release its monthly Employment Situation Report, which could offer more hints about the direction of the US economy, whose recovery has shown glimmers of slowing. The US unemployment rate fell to a three-year low of 8.3% in January. But it held steady in February, while other indicators – such as builder confidence – also levelled out.

The jobs report will provide a more comprehensive picture of the U.S. employment situation than three other employment reports due out next week. But the other reports have offered signs of improvement.

The ADP Employment Report, which comes out April 4th, showed in March that nonfarm employment grew by 216,000 during February – the best February in four years. On April 5th, the US Department of Labor issues its weekly update on unemployment claims by first-time filers. On April 6th, the US Monster Employment Index will provide a comprehensive analysis of online job recruitment. Last month, Monster’s index registered annual growth of 11%.

Revenue recognition in Japan

The proposed new standard on revenue recognition will be the topic of a joint public roundtable meeting to be held April 4th in Japan by FASB and the International Accounting Standards Board.

Scheduled for 9 a.m. to noon local time (8 to 11 p.m. EDT April 3rd), the meeting provides a chance for stakeholders to participate in dialogue with the boards about the proposed, converged standard on revenue from contracts with customers.

An audio recording of the meeting will be made available shortly afterward on the FASB and IFRS websites.

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