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OPINION

Next week's economics: 26-30 Jan

Next week's economics: 26-30 Jan
January 22, 2015
Next week's economics: 26-30 Jan

Prices are falling because of falling oil prices. However, the rate excluding energy will be around 0.5 per cent - which is far below the ECB's target of just under 2 per cent. This tells us that something else is to blame for sub-target inflation. And we'll find out what in other numbers on Friday. They are likely to show that the unemployment rate in the region is stuck at around 11.5 per cent, with the rate for under-25s at almost 25 per cent. Such a weak economy should mean low inflation.

We're likely to see mixed signals on whether this is changing. We could see some good news on Monday, when Germany's Ifo survey could show a third successive monthly rise in German business conditions - thanks to lower oil prices and the weaker euro. However, Thursday's figures from the ECB are likely to show that bank lending to the private sector is still falling, albeit less so than a few months ago. This suggests any recovery will be slow.

US figures, on the other hand, might be rather cheerier. Friday's first estimate of fourth-quarter GDP could show that the economy grew at an annualised rate of over 3 per cent. And other figures might suggest that growth has persisted into this year, with consumer confidence and durable goods orders both increasing - perhaps in response to the fall in oil prices. Also consistent with decent growth will be news of the housing market, where house prices and new home sales should show year-on-year rises of around 7 and 4.7 per cent respectively.

On Wednesday, we'll get the Federal Reserve's latest statement on interest rates. It is likely to repeat that it will be "patient" about raising interest rates - which economists believe means no rise until the summer.

In the UK, the main figure to watch will be Tuesday's first estimate of fourth-quarter GDP. This might show a slight slowdown in growth, from 0.7 per cent in the third quarter to 0.6 per cent. This will be because strong retail spending has been offset by flat production in industry and of government services, and falling construction output.

Other figures will be consistent with this unbalanced expansion. On Friday, polling group GfK could report a rise in consumer confidence and Bank of England numbers could show that consumer borrowing is rising. However, the Bank is likely to also report a year-on-year fall in corporate lending, which might shed doubt upon the strength of capital spending.