UK gros domestic product (GDP) might have bounced back a little in May after dropping by 0.5 per cent in April, next week’s numbers should show. This is because that fall was due in part to companies no longer building up inventories in the run-up to what they feared might have been a no-deal Brexit. Normal growth should have resumed in May.
This does not, however, mean that all is well with the economy.
For one thing, the three-month on three-month comparison is likely to show that the economy stalled in the past three months.
Also, the GDP data are likely to show that services activity has more or less flatlined for the past five months.
And, thirdly, trade figures the same day are likely to show that export volumes have fallen in recent months – although because imports have fallen by more since the end of the precautionary stock-building, net trade is likely to have contributed to GDP growth in the second quarter.
One big reason for this decline will be evident in other numbers next week. Although official eurozone data should show that industrial production recovered a little in May after falling in April (in large part because of a big drop in German output) the numbers will show that output in the region is likely to have fallen in the second quarter, and is below the autumn’s levels. This is depressing demand for UK goods.
Things are not all bad, however. Tuesday’s data on job openings should show that the US economy is still strong, with job vacancies near a record high and hirings well exceeding job losses.
We might also get nice news from China. The PBOC could report that the M1 measure of monetary growth is accelerating; it should now be growing at an annual rate of around 4 per cent, compared with just 0.4 per cent in January. This matters, as such growth has in the past been a good lead indicator of output growth in the country.
Back in the UK, the RICS’s latest survey of estate agents could show glimmers of hope for housing investors. It could show that prices are falling at a slower rate than earlier this year, and that the decline in new buyers’ interest is levelling off. Agents do not, however, expect much rebound in prices. A lack of affordability is still holding prices down.
