With the Fed promising to keep the fed funds rate near zero until unemployment drops below 6.5 per cent, US employment statistics have become even more important. The next set, on Friday 4, are expected to show that the labour market is improving, with a net rise in non-farm payrolls of over 150,000 and a drop in the unemployment rate to 7.6 per cent.
However, even at this rate of improvement, the fed funds rate is likely to stay low well into mid-2014. Also, the falling unemployment rate understates the weakness of the economy, because millions of Americans have dropped out of the workforce and so no longer show up in the data. The ratio of employment to over-16 population is likely to be around 58.7 per cent, less than a percentage point higher than its cyclical low, and far below the 63 per cent-plus rates seen in the mid-00s.
Other US numbers will be ambivalent. The S&P/Case-Shiller measure of house prices on Boxing Day could show a ninth successive monthly rise, leaving prices 5 per cent up since their January low - although they'll still be 30 per cent off their 2006 peak. This, allied to the pick up in employment, will fuel hopes for stronger consumer spending.
However, the ISM survey on Wednesday 2 is likely to show that manufacturing output is stagnating.
One reason for this is the weakness of some of the US's export markets. But here, we could get some encouraging news. Final purchasing managers' surveys in the eurozone are likely to confirm the 'flash' surveys, which showed the rate of decline of activity easing.
This moderation should also be good news for the UK, where purchasing managers could report that manufacturing output was more or less flat in December - its best showing since the spring.
However, Bank of England figures on Friday 4 will remind us that our problems don't all come from the eurozone. These are expected to show that non-financial companies are still repaying debt and building up cash balances. That they are doing so despite puny interest rates shows that they are still unwilling to invest in the real economy. How far this is due to structural factors (the lack of investment opportunities) and how far to cyclical ones (high uncertainty and low confidence) might be clarified in 2013.
The preference for cash over spending isn't confined to companies, though. Bank figures will also show that households are increasing their banks deposits and, perhaps, paying off credit card debt. However, mortgage lending might show another increase, suggesting that the Funding for Lending Scheme is having some effect.
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Chris blogs at http://stumblingandmumbling.typepad.com