Has high street spending recovered from March’s fall? We’ll find out from official figures on Thursday. Economists expect a bounceback simply because that drop was in part due to the bad weather. But even with such a recovery, sales volumes might be no higher in April than a year ago.
What’s more, figures from the CBI might show that sales in May also grew only slowly, which will warn us that retailers’ troubles might well be long-lasting.
Friday’s second official estimate of GDP will show that such weak sales were a major reason for the sluggish growth we saw in the first quarter. These figures should confirm that the economy grew only 0.1 per cent in the first quarter. The news will be in the expenditure breakdown. This could show that consumer spending subtracted from growth but that net exports added slightly to it, albeit thanks to lower imports. Government and capital spending should also have made small positive contributions.
Better news, however, should come from manufacturers. The CBI’s survey on Tuesday should show that these expect strong growth in coming months thanks in part to high export orders. But even these are likely to be less strong than in recent months.
We’ll also get news on inflation next week. Consumer prices inflation (CPI) should be little changed from last month’s 2.5 per cent. The recent rise in oil prices will have increased the CPI, offsetting the dropping out of the inflation data of an increase last April. This is also likely to have caused a rise in producer input price inflation.
Manufacturers’ output price inflation, by contrast, could fall to around 2.2 per cent, its lowest rate since October 2016, in part because of the recent strength of the pound.
In the eurozone, we might get more news of a slowdown. Flash purchasing managers’ surveys could confirm the recent trend, with services and manufacturing growth both down to 15-month lows – although they should remain consistent with a moderate expansion. This picture should be corroborated by Germany’s Ifo survey. It should show that growth has cooled since late 2017 although it remains decent. What might be concerning, however, is that manufacturers’ expectations are rather downbeat.
These messages might be mitigated by the National Bank of Belgium’s survey of business confidence, which might show that optimism is still close to a seven-year high. This matters, because this measure has traditionally been well correlated with growth across the wider eurozone.
In the US, the one figure of note will be Friday’s durable goods orders. These should show a small increase, consistent with economists’ expectations that the economy will grow at a steady pace this quarter.
