Daily Economic Outlook: 8th September 2015

Last week saw President Draghi highlight ECB willingness to expand its  QE programme, if necessary, to support the euro area economy over the coming months. Today's final estimate of regional Q2 GDP growth is expected to confirm its moderate recovery with a 0.3% q/q print, foresees Lloyds Bank. 

After yesterday's lull on the back of the Labor Day holiday, US markets reopen today with the FOMC's September 17 policy decision firmly at the top of the agenda. Despite last week's employment report showing a weaker-than-expected rise in August payrolls, the upward revisions to headcount gains over the previous two months, alongside a stronger-than-anticipated decline in the unemployment rate to 5.1%, chimed with the Committee's desire to see a continued improvement in the labour market as a prerequisite for a hike. Consequently, our call for the Committee to vote to raise rates this month remains intact, although we acknowledge that the risks are evenly balanced.  

Global concerns notwithstanding, the FOMC has acknowledged the primary importance of domestic economic momentum in the run-up to the decision and today's prints are expected to show further improvement. The strong  3.7% (saar) Q2 GDP outturn was partly driven by a pickup in business investment and today's NFIB small business optimism index for August should improve to a three-month high of 96.0.  This would augur well for a continued recovery in corporate spending.  However, as indicated by the Business Confidence Barometer, August's market turbulence may have pressed on sentiment, states Lloyds Bank. Much of the data which feeds into the August US labour market conditions index was already previewed in last week's jobs report. Non-voting Minneapolis Fed President Kocherlokota, who is considered to be a notable dove, speaks tonight on monetary policy.