Join our community of smart investors
OPINION

Next week's economics: 3-7 October

Next week's economics: 3-7 October
September 29, 2016
Next week's economics: 3-7 October

On Monday, purchasing managers should confirm last month's finding that output is now growing after falling in July - albeit perhaps not as much so as in August. Consistent with this, official figures should show that manufacturing output rose in August having fallen in July. We might also see signs of an upturn in the building sector. Purchasing managers might report on Tuesday that activity is now growing after falling in the summer. And Friday's RICS survey should show that house prices and activity are rising - although the rise in prices is due in large part to a shortage of supply rather than strong demand.

However, this doesn't mean the referendum result did no harm. Official figures are likely to show that manufacturing output in July and August together was well below second-quarter levels, suggesting that output will have fallen in the third quarter. And The National Institute Of Economic and Social Research (NIESR) might estimate on Friday that GDP grew by only 0.1 per cent in the quarter, which means the economy has slowed significantly.

Brexit-related uncertainty, however, is not the only problem we face. It's also the case that overseas economies are struggling to grow. Although official figures from France, Germany and Italy could show that industrial production rose in August, the rise might not prevent a drop in the third quarter overall across the region. Better news, however, might come from the retailing sector. Although sales might fall after July's big rise, the trend now seems to be upwards.

US growth might also look patchy. Monday's ISM survey could show that manufacturing is barely growing; it contracted last month. And while Friday's figures could show a decent rise in non-farm payrolls (of around 200,000), this will reflect slower productivity growth rather than robust output growth.

Friday's figures might also show that wage growth is picking up. Allied to weak productivity, this implies rising wage costs and hence a potential inflationary threat. It's to forestall this threat that the Fed is expected to raise rates in December.