UK economic growth has almost stopped. The Office for National Statistics (ONS) is likely to say next Tuesday that GDP rose only slightly in October after falling in September. This would mean that growth in the past three months compared with the previous three was almost zero, and that gross domestic product (GDP) now is barely any higher than it was in February and March.
This isn’t solely due to Brexit uncertainty. Trade figures the same day will show that export volumes have flatlined for the past two years. That’s a reflection of the fact that a lower pound does little to mitigate the impact on exports of weak overseas demand.
But here we might get a few bits of good news. Official eurozone data on Thursday could show that industrial production was flat in October, suggesting that it is at last stabilising after a 5 per cent drop between late 2017 and this summer. Also, The People's Bank of China could report that China's M1 measure of money stock growth is picking up slightly. In the past, this has been a good lead indicator of output growth – although it is not yet growing sufficiently to point to anything better than very weak growth.
And in the US we should see a small rise in retail sales in November. This would be consistent with overall real GDP growing at an annualised rate of around 1.5 per cent in the fourth quarter, Although growth has slowed, we are still some way from recession.
We might, however, see faint signs of a pick-up in US inflation. CPI inflation might rise above 2 per cent for the first time in 12 months, while the core rate (which excludes food and energy) might even touch an 11-year high of 2.5 per cent. Both these rises would, however, reflect low prices last November dropping out of the data, rather than any new inflation.
In fact, Wednesday’s Federal Open Market Committee statement is likely to show the Fed is relaxed about inflation. Economists expect it to leave rates unchanged, having cut them three times since July. And it is likely to repeat its view that the “most likely outcomes” for the economy are for “sustained expansion” and for inflation to stay around its 2 per cent target.
Finally, the Royal Institution of Chartered Surveyors will remind us that the housing market is moribund, with sales, buyer enquiries and prices all weak. The lack of price inflation is no bad thing. But the lack of transactions is a problem, as this causes weak demand for many housing-related items.
