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Proceeding as planned for Greece

Proceeding as planned for Greece

Eurozone finance ministers are due to decide whether the €130 billion second bailout package will be approved. The pre-condition of a successful private sector initiative has been reached so little should stand in the way.

Either way, the euro remains under pressure this morning, falling from €1.3270 against the dollar to €1.3230 this morning that still leaves the single currency well above the €1.3150 level it opened at yesterday. GBP/EUR fell this morning, but direction this morning is likely to come from UK data releases which will give us our first look at how Q1 is shaping up.

This morning in the UK sees industrial production data for January and producer prices for February. We look for manufacturing to continue to grow strongly in line with both the CBI and CIPS surveys, but mild weather will keep industrial production growing more weakly as utility output remains soft. Rising oil prices are likely to lift input price inflation and we would expect some pass through in output prices. But base effects should see annual inflation ease from 4.1% to 4.0%.

Wednesday’s ADP employment report showed private sector hiring running at 216,000 in February, a little ahead of expectations. With the public sector still shedding labour, that would imply a payrolls number of 200,000 or so, which is below expectations of a 210,000 rise. However, there is a small complication in February due to seasonal adjustment factors. In this month, the adjusted number tends to be larger than the unadjusted number reflecting the ending of retail jobs after the sales season is over. We therefore suspect that there is some upside risk to consensus this afternoon and a rise in payrolls of 250,000 would not be surprising. That would be consistent with a further fall on the unemployment rate from 8.3% to 8.2% or so.

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