We use cookies to improve site performance and enhance your user experience. If you'd like to disable cookies on this device, please see our cookie management page.
If you close this message or continue to use this site, you consent to our use of cookies on this devise in accordance with our cookie policy, unless you disable them.

Close

Next week's economics: 9-13 April

Next week could bring evidence that the UK economy is stagnating.

On Wednesday, the British Retail Consortium is expected to say that retail sales in March were only around 2.5 per cent higher than a year ago. This would imply that they are falling in volume terms. This suggests that the squeeze on real incomes and rising unemployment are continuing to deter households from spending.

Few economists expect consumer spending to contribute much to economic growth this year. A better hope lies with exports. And we'll see on Thursday how these are doing. The trade deficit in February is likely to be around the £7.5bn recorded in January. This would be consistent with net exports making a small positive contribution to GDP growth in the first quarter.

Figures the same day will show one reason why the contribution is only small – our exports are being held back because our main trading partner, the eurozone, is still weak. Although industrial production is likely to have grown slightly in February, output will probably be more than 3 per cent below August's peak, and is unlikely to have grown at all in the first quarter.

There should be brighter news in the US. The Fed's beige book – a survey of regional economic conditions – is likely to report that the economy is growing steadily, while Thursday's weekly unemployment claims should be consistent with a continued increase in employment.

This tendency for the US to grow faster than the eurozone (or Japan) will, however, leave a mark in the trade figures. These are likely to show that the US's deficit on goods and services is now on an increasing trend, thanks to faster growth in domestic than overseas demand and to higher oil prices. This probably doesn't (yet) have any implications for the US dollar. But it does mean that net trade will be a negative factor for GDP growth.

There are two other indicators to watch for. On Tuesday the Royal Institution of Chartered Surveyors might say that the balance its members reporting falling house prices has dropped to its lowest level since August 2010. Few, though, will take much comfort from this. It owes more to a lack of supply of houses than to increased demand. Most economists expect house prices to be more or less flat this year.

And on Friday, manufacturers' output price inflation could fall to 3.8 per cent, its lowest rate for over two years. However, input price inflation is likely to be around 7.5 per cent, due to recent rises in oil prices.

visible-status-Public story-url-ecweek_news_050412.xml

By Chris Dillow,
10 April 2012

Print this article

Chris Dillow

Chris spent eight years as an economist with one of Japan's largest banks. Here, he provides insightful commentary on the latest economic news and data, along with thought-provoking articles about investor behaviour.

IC columnists

Simon Thompson

Simon Thompson

Winning stock and trading ideas from the creator of the Bargain Portfolio

The Trader

The Trader

Technical analysis and market calls from our in-house charting expert

Mr Bearbull

Mr Bearbull

Sound advice on running portfolios from an experienced commentator

Smart Money

Smart Money

Practical advice to help you plan your future

Chris Dillow

Chris Dillow

Incisive economic commentary plus thoughts on investor behaviour

Property Matters

Property Matters

Comment on the ups and downs of property investments, with a particular focus on the perennially popular world of buy to let

The Editor

The Editor

Commentary on markets, world affairs and everything to do with investing

Chronic Investor Blog

Chronic Investor Blog

Our light-hearted take on the world of investing

Advertiser reports

Register today and get...

Register today and get...
Please note terms & conditions apply