Steadily improving economies in
Germany and the U.K. stand in contrast to a slowdown in China,
while Mother Nature thwarts further progress in the U.S., data
this week are projected to show.

German business confidence is forecast to hold in February
close to the highest level since mid-2011, while growth in the
U.K. last year was probably the strongest since 2007.
Manufacturing in China stalled this month, according to a
Bloomberg survey.

In the U.S., new-home sales and factory orders for durable
goods probably cooled last month, adding to evidence of the toll
on the economy from winter storms east of the Mississippi River.

The data will provide the latest read on the world’s
largest economy as Federal Reserve Chair Janet Yellen prepares
to deliver a second round of testimony on monetary policy to
lawmakers Feb. 27 on Capitol Hill. The hearing before the Senate
Banking Committee, originally slated for Feb. 13, was postponed
by a snowstorm that closed government offices in Washington.

Elsewhere, a slower pace of inflation in Brazil may
persuade central bankers, who meet on Feb. 26, to become less
aggressive in tightening monetary policy.

GERMAN CONFIDENCE

— German business confidence is projected to hold near the
highest level since July 2011 as Europe’s largest economy
benefits from record-low unemployment and improving demand for
its exports. The Ifo institute’s gauge, scheduled for release on
Feb. 24, is forecast to slip to 110.5 this month from 110.6 in
January, according to the median estimate in a Bloomberg survey
of economists.

— Christian Schulz, a senior economist at Berenberg Bank
in London, said euro-area purchasing managers’ surveys published
Feb. 20 are “raising hopes that German demand will continue to
lift the euro zone out of trouble.” The indexes showed German
manufacturing expanded for an eighth month, albeit at a slower
pace, and services activity accelerated.

U.K. ECONOMY

— U.K. gross domestic product rose 0.7 percent in the
fourth quarter, capping the economy’s best year since 2007 amid
growth in every industry except construction, according to the
Bloomberg median forecast. The Feb. 26 figures, with data on
exports and spending by consumers and government, are the Office
for National Statistics’ second estimate for the quarter.

— “The expenditure breakdown is likely to show some
rebalancing, with positive contributions from investment and net
trade alongside the more familiar consumption drivers,” said
Ross Walker, senior U.K. economist at Royal Bank of Scotland
Group Plc. “Overall, the fourth-quarter GDP data are likely to
be viewed positively by the markets: a moderately above-trend
pace of growth with broad-based expansion.”

CHINA MANUFACTURING

— China’s Purchasing Managers’ Index, a gauge of
manufacturing released by the National Bureau of Statistics and
China Federation of Logistics and Purchasing, probably fell to
50.1 in February, the weakest reading since June, from 50.5 a
month earlier, a Bloomberg survey showed ahead of data on March
1. Numbers greater than 50 signal expansion.

— “Conditions in the manufacturing sector continue to
deteriorate,” Julian Evans-Pritchard, China economist at
Capital Economics Ltd., wrote in a Feb. 20 note. “With no
loosening of monetary policy on the horizon, we expect that
slowing credit growth will continue to weigh on the sector in
the coming months.”

U.S. HOUSING

— Sales of new U.S. homes declined for a third straight
month in January as snowfall blanketed half the U.S. and kept
prospective buyer traffic at a minimum, a Feb. 26 report from
the Commerce Department is projected to show.

— “While higher mortgage rates have clearly taken some
steam out of the housing recovery, they won’t extinguish it
altogether,” Paul Ashworth and Paul Dales, economists at
Capital Economics Ltd., wrote in a research note. Once the
weather returns to seasonal norms, residential investment will
resume adding to overall GDP growth.”

DURABLE GOODS

— Orders placed with factories for big-ticket goods
declined in January for a second month, the first back-to-back
decrease since 2011, a report on Feb. 27 is forecast to show.
Bookings excluding aircraft and military hardware, a proxy for
spending on capital equipment, may have also decreased for a
second straight month.

— “Core orders were likely weak for a second consecutive
month in January, down 1.5 percent,” Bank of America Corp.
economists led by Ethan Harris wrote in a research note.
Shipments of such equipment also declined “as freezing weather
slowed down business activity over the month.”

BRAZIL RATES

— Brazil’s central bank on Feb. 26 may reduce the pace of
monetary tightening as inflation eases and the government
pledges to cut spending from its budget, raising its benchmark
Selic rate by 0.25 percentage point following six half-point
increases.

— “There are more signs of weakness in economic activity,
and inflation was lower than expected in January,” Flavio Serrano, senior economist at Banco Espirito Santo de
Investimento, said by phone. “The central bank expects that
annual inflation will continue to fall in upcoming months. That
leaves the bank in a more comfortable position.”

— “The budget announcement may have kept them from
tightening another 50 basis points,” John Welch, a macro
strategist at Canadian Imperial Bank of Commerce, said. “They
have a lot of monetary tightening packed in there. It’s time to
sit back and see it work.”

INDIA GDP

— India’s gross domestic product probably expanded 4.8
percent in the fourth quarter from the same three months a year
earlier, economists said in a Bloomberg survey before a report
due Feb. 28. The government forecasts growth of 4.9 percent in
the fiscal year through March, faster than the decade-low
expansion of 4.5 percent in the previous period.

— “While inflation is easing along expected lines, growth
momentum continues to be weak,” Deutsche Bank AG economists
Taimur Baig and Kaushik Das wrote in a Feb. 13 report. “Subdued
growth may also nudge the central bank into an easing bias,
although with the weight of inflation targeting on its shoulder,
the Reserve Bank of India will tend to err on the side of policy
tightening in the years ahead.”

To contact the reporter on this story:
Vince Golle in Washington at
vgolle@bloomberg.net

To contact the editor responsible for this story:
Carlos Torres at ctorres2@bloomberg.net