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Opinion

Next week's economics: 21-25 July

Next week's economics: 21-25 July
July 17, 2014
Next week's economics: 21-25 July

On Tuesday, the CBI's quarterly survey of manufacturers should show that order books, confidence and output expectations are high - and perhaps even that investment intentions are too. The economy's strength isn't confined to manufacturing, though. Thursday's official figures could show that retail sales volumes rose by around 1.6 per cent in the second quarter, while a CBI survey on Wednesday should show that July was also a decent month for retailers.

However, our main trading partner isn't so healthy. Purchasing managers' surveys on Thursday are likely to show that the region is growing only weakly. Other surveys will be consistent with this. The National Bank of Belgium is likely to report that business confidence is lower than it was earlier this year. And although Germany's Ifo survey should report decent current business conditions, it could point to a decline in confidence about the next few months.

We'll see one reason for this weakness in Friday's figures from the European Central Bank. They are likely to show that bank lending to the private sector is still falling; the extent to which this is a problem of credit availability or a lack of demand is doubtful, but either is bad for economic activity.

Elsewhere, though, things are looking up. In China, purchasing managers might confirm their message last month, which is that the economy is pulling out of its soft spell. And in the US, durable goods orders should reverse last month's fall, consistent with an economy that's growing decently.

It's also worth noting US inflation data on Tuesday; some people are beginning to worry that this might rise. And figures could be consistent with this. The 'core' inflation rate (which excludes food and energy) could rise to 2.1 per cent; it was 1.6 per cent as recently as February. For now, though, this is not high enough to worry the Fed.

On Wednesday, we'll see whether the Bank of England is moving nearer to raising interest rates, when it releases the minutes of its last meeting. Low wage and price inflation and a strong pound are likely to be reasons why it is still not thinking of tightening policy.