Next week’s figures will show us the economic damage being done by the UK’s second lockdown.
On Monday, purchasing managers are likely to report that both manufacturing and services fell back into recession this month. And later in the week, the CBI will say that retail sales slumped in the month as non-essential retailers were forced to shut. The lockdown might not be the only problem for the high street, however: the CBI found that sales fell sharply in October too, suggesting the retail recovery was running out of steam already.
One upside of the first lockdown, however, is that it forced some of us to save more and so repair our balance sheets. Bank of England data on Friday will show that credit card debt has fallen since the lockdown while cash savings have increases sharply. Other data from the Bank will, however, show the counterpart to this. Lending to small businesses has soared, as they borrow to tide themselves over the loss of revenues. This threats to trigger a swathe of business failures in coming months.
One area of the economy that’s not suffering, however, is the housing market. The Nationwide could report next week that house prices have risen 5 per cent in the past 12 months, the fastest rise for five years. And the Bank of England will say that mortgage approvals have jumped sharply since the lifting of the first lockdown. Most economists, however, this this rise in unsustainable and that prices will slip back next year as the stamp duty holiday ends and unemployment rises.
In the eurozone, we might also see signs of weak activity. Purchasing managers are likely to say that the services sector is shrinking and manufacturing growing only weakly. Germany’s Ifo survey will report that industrialists’ confidence has slipped back after a good rise during the summer. And the National Bank of Belgium could also report a fall back in business confidence.
It won’t all be grim, though. The ECB could report that the M1 measure of the money stock has risen by around 14 per cent in the past 12 months, a five-year high. This matters, because in the past such growth has been a great lead indicator of faster growth in output.
In the US, official figures are likely to confirm that real GDP rose at a record annualized rate of around 33 per cent that’s 7.5 per cent unannualised. What’ll be new in these numbers, though, will be data on corporate profits. These could show an enormous jump.
