Next week could bring mixed signals about the strength of the post-pandemic recovery.
The CBI’s manufacturing survey should be strong, showing that output expectations are high, thanks to strong order books. Companies will, however, also report rising cost and price pressures.
On the other hand, though, the CBI might also report that although retail sales are up strongly from their Covid-ravaged level of a year ago they are only around normal for the time of year. This will cast doubt upon whether the savings consumers built up during the pandemic really will fuel a big consumer boom.
Flash purchasing managers surveys might also be lacklustre. They could show that while the manufacturing and services sectors are both growing nicely, growth has slightly cooled off in the past couple of months.
Eurozone data might also show a mixed picture. On the one hand, the National Bank of Belgium’s survey of business confidence might be close to a record high: this matters, as this has in the past been a bellwether for the eurozone generally. And flash purchasing managers’ surveys could show that service sector activity is growing strongly,
But on the other hand, Germany’s Ifo survey could show that firms’ expectations and assessment of the current situation have levelled off at levels below what they were in 2018. Purchasing managers’ manufacturing surveys might corroborate this, showing that although growth is still good it is no longer accelerating.
Also, the ECB could report that annual growth in the M1 measure of the money stock is slowing. Which matters because this has in the past been a good lead indicator (with a lag of a few months) of output growth. Yes, monetary growth is still strong enough to point to a decent expansion, but this needs watching.
The US, meanwhile, should see steady growth. Wednesday’s figures should show another rise in durable goods orders – though the prices at which these orders are met, and the time it takes to fulfil them, might not be so comforting. And Friday’s numbers could show small rises in personal income and spending.
Housing market data are also important. Next week’s numbers could show that sales of both new and existing homes have cooled off recently. This might, though, owe more to a lack of supply as to weaker demand. The National Association of Realtors is likely to report that prices are rising strongly.
