The world’s manufacturers are coping okay with the threat of a trade war, next week’s figures might show. In the UK, Monday’s purchasing managers’ survey should show that growth is steady. The equivalent survey in the US should show the sector is booming, albeit not quite as much so as two months ago. And in the eurozone, purchasing managers should confirm their flash survey which showed manufacturing growth rising to a three-month high last month. This suggests that the region is pulling out of the soft patch it experienced in the first half of the year. Official figures should confirm this. They should show that French and German industrial production rose in July.
One exception to this generally cheery picture might be China, where purchasing managers might report that growth has slowed to a 14-month low. This might not be wholly due to higher US tariffs. Monetary growth has been slowing for months in the country, and this is usually a harbinger of slower output growth. Given that such slowdowns often mean falling commodity prices, investors in mining stocks should be especially heedful of this problem.
Other UK purchasing managers’ surveys should confirm that growth is steady. They should show continued expansion in services, and perhaps the fastest growth in construction output since early 2016.
The housing market, however, remains weak. The RICS should say on Friday that prices are barely rising nationwide, and are still falling in London, and that transactions remain depressed – something that's bad news for a lot of retailers. And the Halifax could report that annual house price inflation is only around 3 per cent – although this will be slightly up on a few months ago.
The most eye-catching data, though, should be in Friday’s US labour market report. This could show that around 200,000 net new jobs were created in August and that the unemployment rate, at under 4 per cent, is at its lowest level since 1969 – although many people who’d like a job aren’t included in those figures.
Even more important, perhaps, will be what’s happening to wages: is this low unemployment pushing up annual growth in average hourly earnings from last month’s 2.7 per cent? Any rise will reinforce expectations that the Fed will raise rates twice again this year.
What’s been remarkable in recent months, however, is just how little wage growth has risen in the face of low unemployment. Even if inflation is a danger, it is not yet a grave and immediate one.
