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OPINION

Next week's economics: 6-10 Oct

Next week's economics: 6-10 Oct
October 1, 2014
Next week's economics: 6-10 Oct

On Tuesday, NIESR is expected to estimate that real GDP grew by around 0.5 per cent in the third quarter. That's half the rate it grew in the spring. Official data the same day on industrial production will be consistent with this. Although they should show a small rise in manufacturing output in August, production will be below the levels of March-April.

The housing market might also be cooling. On Thursday, the RICS could report another decline in the proportion of estate agents reporting rising prices as buyer interest wanes. This could be corroborated by Halifax's house price report, which could show a fall in the annual rate of increase.

Bank of England figures, however, will show that households have been injecting huge amounts of cash into the housing market. In the second quarter, spending on houses is likely to have exceeded mortgage borrowing by around £12bn, or 4 per cent of income. This represents a huge turnaround from the mid-2000s, when mortgage borrowing exceeded house purchase and so helped to fuel consumer spending.

Despite this, a report on Wednesday from the Bank on credit conditions is likely to show that the availability of bank loans has increased recently. This, though, is not necessarily good news. It suggests that the weakness of bank lending to companies is due to a lack of demand for loans, which in turn sheds doubt upon official forecasts of a big rise in capital spending.

Other figures in the week will remind us of a reason for the UK's slowdown - the eurozone is still struggling. In Germany, official figures could show a fall in industrial production in August, albeit after a big rise in July; this would be consistent with modest quarterly growth. However, in France and Italy output could be on course for a quarter-on-quarter drop, with a decline in production since the spring.

We'll find out on Thursday what the Bank of England intends to do about this. It has expected a slowdown at the end of this year, and so shouldn't be alarmed by signs of one. It is expected to keep rates on hold, perhaps until February.