The UK economy has bounced back strongly, but it is a long way from fully recovered, next week’s numbers will show.
Thursday’s figures will show that real GDP jumped by over 15 per cent in the third quarter. That’s a record rise, following the second-quarter's record fall. However, the numbers will also show that the pace of the recovery has slowed recently, partly as a result of localised lockdowns, and that GDP is still around 8 per cent lower than it was before the pandemic.
What’s more, this upturn isn’t enough to strengthen the labour market much. Tuesday’s numbers could show that while employment stabilised last month, it is still over 650,000 lower than before the pandemic. And most economists expect it to fall further in coming months.
Employment is only part of the picture, though. The figures will also show that although total hours worked have risen recently, they are still more than 10 per cent lower than they were before the pandemic.
Nevertheless, the recent upturn in hours has helped to raise average weekly wages. The ONS could report that, having fallen over the summer, these are now more than 2 per cent up on a year ago – although such growth is far short of anything likely to raise price inflation and could be reversed by November's lockdown.
Eurozone data might paint a similar picture to the UK’s. Official figures should show that industrial production has risen by around 30 per cent from April’s low, but is still around 5 per cent below it’s pre-pandemic levels. The numbers will also remind us that the peak in output was as long ago as late 2017. While the pandemic has of course greatly increased the region’s economic troubles, these were significant before then. The pandemic is not our only problem.
We should, though, get two better pieces of news. Germany’s ZEW survey should show that financial professionals are optimistic about the country’s economic prospects – albeit less so than in the summer. And Chinese data could show that the M1 measure of the money stock has risen by over 8 per cent in the last 12 months, its fastest rate since early 2018. In the past, this has been a good lead indicator of faster output growth in the country. That could be good news for emerging market and mining equities.
