Global economic growth might be coming off the boil slightly, next week’s numbers could show.
On Friday, the ISM survey in the US could show that manufacturing growth, while still strong, is lower than it was in the autumn. This would be consistent with Tuesday’s numbers showing a small rise in durable goods orders and with the Conference Board’s measure of consumer confidence giving a lower reading than in the autumn – although it will still be near a 17-year high.
In Japan, official figures could show a drop in industrial production in January, albeit after a big jump in December. And in China, purchasing managers are expected to report only slow growth in manufacturing activity with little sign of any acceleration.
UK figures might fit this pattern. It’s possible that purchasing managers will report that manufacturing growth has fallen to a seven-month low – although this means it’s still healthy by the standards of recent years.
We might, though, see other more worrying signs.
One will come in company finance data from the Bank of England. These could show a slowdown in borrowing growth and an acceleration in growth in bank deposits. In one sense, this might be good news – a symptom of increased domestic profits and free cash flow. In another, though, it’s bad as it signals that companies are still reluctant to invest.
Consumers are also downbeat. A survey by Gfk could show that consumer confidence, while higher than a couple of months ago, is lower than it was last year. This might not be mere words. Bank of England data could show a slowdown in consumer credit growth – although this will still be up by almost nine per cent year on year – and fewer mortgage approvals than in the autumn.
This matters. Last year, growth was supported by consumers raiding their savings and borrowing more. One reason why economists expect only slow growth this year is that they don’t expect this to continue. Next week’s figures might be consistent with those expectations.
We could, however, get good news on inflation. Wednesday’s figures could show that CPI inflation is stable in the eurozone, with the core rate, at around 1.2 per cent, being flat since the summer. This means there’s no need for the ECB to tighten monetary policy soon, so one threat to growth should be absent.
