In a light week due to the Christmas holiday, data will probably show business investment in the U.S. started getting back on track in November, prices climbed in Japan and inflation in Mexico picked up in early December.
U.S. DURABLE GOODS
— Durable goods orders are projected to advance 1.8 percent in November, boosted by more bookings for commercial aircraft and motor vehicles, following a 1.6 percent drop in the previous month. Demand for business equipment, one area of the economy that’s struggled to gain traction, is forecast to increase for the first time in three months. A gain in capital goods orders may signal companies are growing a bit more confident in the expansion entering 2014. The report is due out Tuesday.
— “Business investment is starting to gain momentum, especially in the vital manufacturing sector,” Joseph Carson, director of global economic research at AllianceBernstein LP, said in a research note. “Recent signs of increased investment intentions by Boeing and General Motors in the U.S., two key firms in the transportation sector, send a bullish signal on the future pattern of capital spending.”
— Any gain in business spending may prove short-lived, according to Stephen Stanley, chief economist at Pierpont Securities LLC. “Sure, there will be much less sturm und drang surrounding government shutdowns and debt ceiling crises in 2014, but firms still have no visibility regarding tax reform, and a number of industries continue to face extraordinarily aggressive regulatory policies,” Stanley said in a 2014 preview. “Businesses will be preoccupied and as a result relatively conservative regarding investment and hiring plans next year.”
PRICES IN JAPAN
— Japan’s core consumer prices probably rose 1.1 percent in November from a year earlier after a 0.9 percent gain in October, according to a Bloomberg News survey of economists ahead of inflation data due Dec. 27.
— “Abenomics’ first arrow — aggressive quantitative easing — has succeeded in driving inflation higher. Still, inflation expectations appear to be falling well short of the 2 percent target,” Deutsche Bank AG economists including Hong-Kong based Michael Spencer said in a research report. “So even though inflation is rising quickly in Japan — at least for Japanese measures — we think the central bank may decide to augment or extend QE around April next year.”
MEXICO INFLATION
— The national statistics agency’s Monday report may show that consumer prices increased 0.35 percent in the first half of December after rising 0.02 percent in the final two weeks of November.
— “Usually as the holiday season starts demand increases and we see some pressures on core prices,” said Marco Oviedo, chief Mexico economist for Barclays Plc. “Economic activity accelerates and it’s reflected in prices for services, goods — everything.”
— Retailers may have boosted prices on junk food and soda in anticipation of a tax that comes into effect next year on sugary drinks and high-calorie snacks, said Alexis Milo, chief Mexico economist at Deutsche Bank AG in Mexico City. “Pressure will also come from some controlled prices.”
TAIWAN RATES
— Taiwan’s central bank will probably hold its benchmark interest rate at 1.875 percent for a 10th straight meeting, economists surveyed by Bloomberg News project before a decision due Thursday.
— “From a growth perspective, after a disappointing 2013, we are turning more constructive on 2014 and 2015, when we expect growth to reaccelerate,” said Wai Ho Leong, a Singapore-based economist at Barclays Plc. “This should set the stage for the central bank to consider normalizing policy from” the second half of 2014, he said.
VIETNAM GDP
— Vietnam’s gross domestic product probably rose 5.3 percent this year, the median estimate in a Bloomberg News survey showed ahead of data due Tuesday.
— “Vietnam is entering into its third year of broad macroeconomic stability following a prior era of heightened imbalances,” Moody’s Investors Service analysts including Singapore-based Christian de Guzman said in a report. “While lower when compared to historical trends, Vietnam’s real GDP growth continues to be higher than similarly-rated countries and provides support to the credit.”
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