The UK economy is slowing down, next week’s numbers could show. The ONS is expected to report that real GDP grew by 0.4 per cent in the three months to October, after 0.6 per cent in the third quarter. Growth in both construction and manufacturing is likely to have slowed, with output of the latter being no higher in October than it was at the turn of the year.
On Tuesday we could see the human effect of this. The ONS might confirm last month’s data showing that unemployment is now edging up, albeit from what was a 43-year low.
A big reason for the slowdown will be evident in other numbers on Monday. These could show that – after a brief positive blip in the summer – net exports are no longer making a significant contribution to growth.
This reflects the fact that overseas economies are slowing down, a process likely to continue well into next year. Germany’s ZEW survey could show that optimism among finance professionals is flatlining near a seven-year low, reflecting the slowdown in the eurozone and China, which the trade war is exacerbating. And in China, the PBOC could report that growth in narrow money has slowed to a four-year low. That’s a lead indicator of slower output growth in the country and of falling commodity prices.
There’ll even be evidence of a cooling off in the US, where the Fed is likely to report a slight slowdown in the growth rate of industrial production: in the fourth quarter it is unlikely to grow at the 1 per cent-plus rate it achieved in the second and third quarters. There might, though, be better news from retail sales data, which should show ongoing growth, thanks to continued increases in employment, rising wages and high consumer confidence: the slowdown in the housing market isn’t yet hitting spending.
On Wednesday we’ll get UK inflation figures. CPI inflation is likely to be unchanged at 2.4 per cent, as a food price rise last November drops out of the numbers but utility bills rise. Producer output price inflation should also be flat at around 3 per cent. These numbers, however, won’t take account of the latest drop in oil and petrol prices. With the global slowdown likely to hit commodity prices, we should see inflation edge down next year unless sterling falls sharply.
