Next week's biggest economic event will be Friday's US labour market report. Last month, the figures showed a net rise in jobs of only 120,000, casting doubt upon the vigour of the recovery. Any repeat of that would be bad for the US dollar and probably equities.
However, the numbers should be seen in the context of figures released on Thursday. These could show that labour productivity dropped sharply in the first quarter, as employment and hours rose (mainly in January and February) faster than GDP. This suggests that some companies were too optimistic about their hiring and retention in the quarter, and so in effect built up an excess inventory of labour. They might now be running this down - but this could mean that the employment report understates the strength of GDP, just as it overstated it in January and February.
Consistent with this, other indicators in the week should be benign. We could see a rise in personal spending on Monday, further expansion in the ISM's report on manufacturing, and banks' loan officers reporting both demand and ready supply of loans.
Sadly, however, the same cannot be said for the eurozone. Purchasing managers' surveys are expected to show that the downturn in the region, far from stopping as economists had hoped a few weeks ago, is actually intensifying. And Monday's data from the European Central Bank (ECB) could show that credit growth is slowing, and perhaps that the private sector is, net, repaying debt.
In this context, UK purchasing managers' surveys will be important, as they'll tell us how well industry is coping with the recession in our main trading partner. Recent surveys have been good, but can this continue?
One thing that deserves close attention will be Wednesday's Bank of England figures on company cash holdings. These have recently shown rising cash holdings and some debt repayments, despite low interest rates – which suggests that companies are still reluctant to invest or expand. Any optimism about the future requires this to change.
We'll see on Thursday how UK and eurozone central bankers respond to this. Nobody expects any change in UK policy, but the ECB might announce a small cut in its repo rate - although this is unlikely to make much difference.