Join our community of smart investors
Opinion

Next week's economics: 28 Oct - 1 Nov

Next week's  economics: 28 Oct - 1 Nov
October 25, 2013
Next week's  economics: 28 Oct - 1 Nov

The CBI is expected to report on Monday that retail sales grew well in the year to October, continuing a recent trend. One reason for this is that increased employment is raising real incomes, but another is that consumer confidence is rising. Friday's survey by GfK could show that this has risen to its highest level since the autumn of 2007.

Partly reflecting this, Bank of England figures on Tuesday are likely to show another rise in mortgage approvals, consistent with a strengthening housing market; note, though, that these are still only around half their peak levels.

It's not just the household sector that's picking up, though. Friday's purchasing managers' survey is likely to show that manufacturing activity is, too.

There might, though, be a couple of concerns in next week's figures. One could be that they might confirm last month's finding, that the growth in bank deposits of households and companies has fallen. This might portend slower growth in coming months. Another concerns companies' bank lending. Although there have been faint signs recently that this might have stopped falling, we need stronger evidence of this before being confident that companies are willing and able to step up their borrowing.

It's not just in the UK where the housing market is recovering. It's also doing so in the US. Tuesday's figures are likely to show that house prices have risen by over 12 per cent in the last 12 months - although they are still around 20 per cent below 2006's peak.

However, this is not doing much for the wider economy. Although Friday's ISM survey should show decent manufacturing growth, Wednesday's numbers could show that GDP grew at an annualised rate of only around 2 per cent in the third quarter, while Thursday's numbers could show only modest growth in personal incomes and spending.

With growth still weak - and inflationary pressures absent - the Fed is expected to announce on Wednesday that it will continue its pace of quantitative easing. 'Tapering' will have to wait until December, at the earliest.

In the eurozone, Thursday's numbers are likely to show that some 19.2m people in the region are unemployed - 12 per cent of the workforce. Among under-25s, the rate is almost 24 per cent. This will remind us that although the region is out of recession, its economic problems are far from solved.