Fears of a global slowdown might recede a little next week.
In the eurozone, Germany’s Ifo survey should show a stabilisation in both current output and companies’ expectations, while the National Bank of Belgium should also report that business confidence has stopped falling. And the ECB should say that the M1 measure of the money stock is rising by over 8 per cent year on year; historically, this has been an excellent lead indicator of a pick-up in activity.
In Japan, industrial production could show a second successive monthly rise, consistent with output now picking up after falling earlier this year.
And in the US we should see rises in sales of new homes and in durable goods orders. And consumer confidence, although off its summer peak, is still near an 18-year high. All this points to steady growth in the fourth quarter,
There will, though, be a couple of worries. Although GDP figures on Wednesday should confirm that the US economy grew at an annualised rate of around 1.9 per cent in the third quarter, they could show that capital spending fell for the second successive quarter, and that profits have flatlined over the last 12 months. Although not a recessionary indicator yet, this could be a sign of weak growth to come.
But in the UK things might be less cheery. The CBI could say on Monday that retail sales are poor. Although their measure has recently been much softer than official figures, this would be consistent with GfK’s survey, which could show consumer confidence near a six-year low. It would also be consistent with Bank of England data which are likely to show another drop in consumer credit growth. In itself, though, this is an ambiguous signal. It could mean that people have less need to borrow now that real wages are rising. Or it could be a sign of increased caution about future prospects.
Other data will show that the housing market is a drag on the economy. The Nationwide is likely to report only a slight rise in prices in November, leaving them around 0.4 per cent up on a year ago – which means they are falling in real terms. In itself, this isn’t a bad thing: falling prices are good for people who’d like to buy a house in the future. What is bad, though, is that transactions are still weak: the Bank of England will report that mortgage approvals are flatlining. This is depressing housing-related spending.
Finally, Friday’s figures will show that inflation in the eurozone has been flat for months, with the core rate around 1.2 per cent, well below its target. This means monetary policy has been too tight.
