The world economy is recovering from the lockdown, next week’s numbers will show.
Official figures from France, Germany and Italy should show that industrial production posted second successive big monthly rises in June. Output might, however, still be well below pre-lockdown levels – although perhaps not by much in Italy.
In the US, we should see another big rise in employment. One perverse effect of this will be to reduce average weekly earnings. This is because it will be disproportionately low-paid workers who are rehired, having borne the brunt of the job losses in March and April and this will by simple maths reduce average pay.
Total employment, however, is likely to remain far below its pre-lockdown level, with the unemployment rate – at over 8 per cent – being twice as high as it was at the start of the year.
The ISM survey should confirm that the US is expanding. Manufacturers are, however, likely to report that the upturn is still weak.
In the UK and eurozone, purchasing managers should confirm flash surveys showing that manufacturing and services expanded in July, with the UK manufacturing reading at a five-year high. Interpretation of the surveys is, however, tricky: high readings tell us that most companies are enjoying increased activity but do not tell us how strong the improvement is for each company.
We’re likely to see further weakness in the UK housing market. The Halifax could report a fifth successive monthly decline in prices, leaving annual price inflation below 2 per cent. Granted, activity has been minimal because of the lockdown, so these numbers are somewhat artificial. They do, though, draw attention to a tricky question: given rising unemployment, unaffordable prices and heightened uncertainty why should prices recover much after the lockdown?
We’ll see the Bank of England’s latest assessment of the economy on Thursday. It is likely to foresee a weakish recovery and little danger of inflation – albeit emphasising the big uncertainties. It is not expected to announce any further monetary easing, although it will probably say it is ready to do so if the recovery proves weaker than expected.
