The UK’s housing market might just be perking up a little, next week’s figures could show.
The Bank of England might report on Thursday that mortgage approvals have edged up in recent months. This could be consistent with a report from the Nationwide showing that house price inflation has risen, from 2 per cent in June to just under 3 per cent this month.
This doesn’t, however, signal a generalised upturn in sentiment about the future. GfK is likely to report on Friday that consumer confidence has been flat for months at a level well below what we saw in 2015-16. This’ll be corroborated by Bank of England data, showing that growth in consumer credit is flat, albeit at almost 9 per cent.
Perhaps more worryingly, bank lending to companies remains weak: Bank data could show that lending to small companies is flat from a year ago. This is consistent with the fact that uncertainty about Brexit (among other things) is holding back capital spending. Bank numbers could also show, however, that companies cash holdings are growing more slowly.
US numbers, by contrast, are much stronger. In particular, the Conference Board might report that consumer confidence is close to an 18-year high. Consistent with this, house prices are rising – by around 6.5 per cent year-on-year according the S&P index released on Tuesday. One reason for such confidence is that the economy is growing strongly. Wednesday’s numbers should confirm that real GDP grew at an annualised rate of just over 4 per cent in the second quarter. They could also show that profits rose especially strongly.
Eurozone numbers, by contrast, should be more mixed. Germany’s Ifo survey could show that growth has slowed markedly recently, with businesses’ expectations being especially subdued.
On the other hand, monetary figures should be encouraging, These should show that the M1 measure of the money stock grew by around 7.5 per cent in the year to July. In the past, such growth has been a good lead indicator of real economic growth being OK in the following months. The numbers should also show continued steady growth in bank lending to companies, and strong growth in consumer credit.
Other figures will show that inflation is not a problem in the region. Although Friday’s figures could show that headline consumer price inflation is above the ECB’s target (of just below 2 per cent) this is due to higher oil prices. The “core” rate – which excludes food and energy – should be around 1.3 per cent, much the same rate it has been for months. We’ll see one reason for such stability on Friday. Figures then will show that the unemployment rate remains high, at around 8.3 per cent.
