Next week might bring hopes of a pick-up in global economic growth. In Japan, official figures should show that industrial production rose in April after a big fall in the first quarter. Manufacturers expect a further rise in May.
In the eurozone the European Central Bank (ECB) should report that narrow money growth has accelerated recently: it jumped from 6.2 to 7.4 per cent from January to March. This is great news, as such growth has for years been a good lead indicator of output growth in the region, with a lag of a few months.
And in the US, the Conference Board should report that consumer confidence, although lower than it was in the autumn, is still near a 19-year high. S&P should also report that house prices have now stabilised after falling in the second half of last year. This would be consistent with official figures showing that sales of new houses have risen recently.
It might not all be good news, though. Thursday’s figures could show that the US’s trade deficit has been on a widening trend for the past three years. This is not necessarily a problem for the US dollar – the same faster growth than overseas that has caused the deficit to widen also means that interest rates are higher in the US than in other developed economies, which supports the dollar. It might, though, be a political problem. While the deficit remains big, President Trump will continue to complain about the US “losing” billions of dollars. That could sustain the trade war.
In the UK, research group GfK is likely to report that consumer confidence has been stable so far this year, although people are more confident about their personal situation than about the general economy. They are not, however, confident enough to borrow more. Bank of England data are likely to show that consumer credit growth has slowed to close to a five-year low and that mortgage approvals might be at their lowest level since December 2017. One effect of the latter will be evident in the Nationwide’s report on house prices. This could show that prices are lower than they were in the summer.
Not only are households not borrowing at the pace they once were, nor are companies. Other Bank data could show that lending to companies has slowed. This would be consistent with the precautionary stockpiling earlier in the year coming to an end. It would also be consistent with a continuation of the longstanding stagnation in business investment.
