Daily Economic Outlook—Jan 29

The first estimate of US Q4 GDP that is due to be released today is likely to indicate a noticeable slowdown from Q3's annualised growth of 2%. The US economy is expected to have expanded 1.2% in Q4. Several factors are likely to have caused the expected slowdown, particularly the slowdown in growth of investment and consumer spending.

The indicator of US labor costs, the employment cost index for Q4, is also due to be released today. The index is expected to rise 0.7% q/q, as compared with the consensus forecast of 0.6%. Meanwhile, the Chicago PMI will also be released with the University of Michigan's final reading of consumer confidence survey.

Eurostat's flash estimate of euro area's January CPI inflation is due today. Germany's figures that were released yesterday were on par with the expectation that the annual headline CPI will rise in January to 0.4% from December's 0.2%, mainly due to the sharp decline in energy prices in 2015. Inflation continues to be at low level in spite of a likely increase, and might decelerate again in the following months. Therefore, the flash estimate today is not expected to change the likelihood that the ECB might further ease policy.

The Q4 GDP data for Spain and France will also be released today. The Spanish economy is likely to have grown at a stronger rate of 0.8% q/q, whereas the French GDP growth is expected to be weaker at 0.2%.