The economic upturn is being held back by shortages and rising prices, next week’s developments could show.
Purchasing managers in the eurozone could report that growth has slowed a little in part because of the difficulty of obtaining materials and parts. Germany’s Ifo survey is likely to corroborate this, showing a steady decline in both current growth and expectations, in part because of shortages such as of chips for cars and higher prices of raw materials. Consistent with all this, the National Bank of Belgium could report a drop in business confidence, although this will remain well above its long-term average.
ECB data might also hint at a slowdown. These could show a slight slowdown in annual growth in the M1 measure of the money stock, implying a marked slowdown in inflation-adjusted growth thereof. This matters, as this has in the past been a good lead indicator of output growth. It is pointing to a cooling off in activity – not a sharp slowdown, but a gentle one.