LONDON (AFX) - Euro zone figures this week are expected to provide further evidence of a sharp slowdown in the economy, raising the likelihood of a rate cut from the European Central Bank, economists said.
The ECB meets on Thursday and will be under enormous pressure to cut rates, following the muted response to its decision to hold rates at 3.75 pct at the last meeting. As well as the ECB, the Federal Reserve, the Bank of England and the Swiss National Bank, meet next week to decide their latest rate decisions and all are expected to cut once more. The ECB argued after the last meeting that it needed more information about the impact of Sept 11 on the euro zone economy before advocating a rate cut. Next week's data should provide this information, economists said. In particular, they will be eyeing the slew of euro zone data. Monday's CPI data is expected to show evidence of decreasing price pressure, with economists projecting a 0.1 pct fall, according to the AFX consensus of forecasts.
Others like the services PMI will reflect the fully the impact on business sentiment of the Sept 11 terrorist attacks. "A large drop in the new business index combined with a sharp deterioration of business expectations in September point to a sizeable fall in the services PMI in October, probably the largest since the series began in July 1998," said Schroder Salomon Smith Barney economist Michael Saunders.
Unemployment and consumer confidence figures are also expected to highlight the worsening economic trend. Germany, the euro zone's largest economy, is expected to show further signs of a struggling economy.
Unemployment is expected to rise at a somewhat faster pace than in earlier months in October, reflecting the retrenchment since Sept 11. "Activity has slowed abruptly this year, adversely affecting labour demand, although numerically the increase in the number of out of work has come almost wholly from people exiting training and employment promotion schemes," said Royal Bank of Scotland European economist Nigel Anderson.
"The risk is that as the economy weakens further in the near-term, lay-offs mount and unemployment accelerates," he added. Other figures of interest include French consumer confidence numbers, which are expected to be the lowest since the beginning of 1998.

Economists' forecasts for euro zone indicators due Nov 2-9
AFX CONSENSUS PREVIOUS

MONDAY NOV 5
Euro zone Oct CPI
month-on-month (pct) -0.1 +0.3
year-on-year (pct) +2.4 +2.5

TUESDAY NOV 6
France Oct consumer confidence -18 -15

German Oct unemployment
month-on-month (pct) 9.4 9.4
monthly change (000) +19 +20

Euro zone Oct services PMI 47 49

Euro zone Sept unemployment
month-on-month (pct) 8.4 8.3

Euro zone Oct business confidence -17 -16

Euro zone Oct consumer confidence -11 -12

Euro zone Sept PPI
month-on-month (pct) +0.1 -0.1
year-on-year (pct) +0.7 +1.9

WEDNESDAY NOV 7
German Sept factory orders
month-on-month (pct) -2.2 +1.2
year-on-year (pct) -3.4 -4.7

Euro zone Oct business climate index -0.635 -0.57

Euro zone Aug retail sales
year-on-year (pct) +1.9 +1.6

THURSDAY NOV 8
German Sept industrial production
month-on-month (pct) -1.5 -2.2
year-on-year (pct) -2.1 -1.0