We might see signs – albeit tentative and mixed – of a pick-up in the world economy next week.
One indicator to watch will be the purchasing managers’ report on Chinese manufacturing. This has recently picked up slightly, and might hit a four-month high next week, although this would still mean output is stagnating.
In the US, Monday’s numbers should show that retail sales rose in February, having been depressed in December and January by the government shutdown. The Institute for Supply Management survey the same day should show that manufacturing is growing nicely, although not at the rapid pace it was last autumn. And Friday’s figures should show that non-farm payrolls growth picked up in March after very little expansion in February.
In the eurozone, although official figures could show that retail sales slipped slightly in February the trend seems to be upwards. Sales volumes should be around 2 per cent up year on year, and on course for decent growth in the first quarter as a whole.
>In the US, Monday’s numbers should show that retail sales rose in February, having been depressed in December and January
Germany’s industrial production numbers, however, could show a weaker picture. Although we might see a rise after January’s fall, output will be 4 per cent below its spring peak and on course for a second successive quarter-on-quarter fall. The final purchasing managers' survey from the eurozone might corroborate this. It should confirm the flash survey, which showed a fall in manufacturing activity.
In the UK, purchasing managers should report slow but stable growth in both manufacturing and services – consistent with GDP growth sticking around 0.2 per cent quarter on quarter. They might, however, report that construction activity is falling. This is consistent with a Brexit effect: buildings are long-lived assets that are irreversible investments and so spending on them is most sensitive to uncertainty.
On Friday we’ll get the latest Halifax report on house prices. This has shown huge month-on-month volatility recently, with prices jumping 5.9 per cent last month – which nobody really believes. A fall-back is possible next week.
Friday’s US data will show that low unemployment – the rate is near a 50-year low – is finally raising wage inflation: average hourly earnings might be 3.5 per cent up on a year ago, the biggest increase for 10 years. This might cast doubt upon the Fed's recent promise not to raise interest rates for a long time.
