Both the UK & US economies have made a relatively slow start to the year & this week’s data releases should illustrate whether this is the start of a weaker trend or a blip.
Tuesday brings UK GDP data for the first quarter with growth expected to slow from 3% year on year in the final three months of 2006 to 2.8%. Softer growth in overall consumer spending in the first quarter is likely after retail sales for February proved weaker than expected.
Manufacturing output growth has also slowed in the first quarter & the CBI’s Industrial Trends survey for April, due on Tuesday, is expected to show the volume of output measure weakening as sterling’s strength weighs on the sector.
US GDP first-quarter data, due on Friday, are expected to show growth weakening from 2.5% (annualised) in the fourth quarter to 1.7%, with the slowdown in the housing market dragging residential investment spending sharply lower.
Business investment is also likely to fall for a second consecutive quarter following weakness in core durable goods orders, down 1.9% year on year in February. The March durable goods report, due on Wednesday, is also likely to prove disappointing although higher Boeing aircraft orders will boost the headline figure.
US consumer confidence for April, due on Tuesday, is expected to fall from 107.2 to 105.0, partly as a result of higher petrol prices.
The question of whether the US housing market is stabilising remains debatable. Existing home sales for March, due on Tuesday, are expected to fall from 6.69m in February to 6.5m. New home sales sank to a 6½-year low of 848,000 in February but are expected to improve modestly to 880,000 in March’s data on Wednesday.
The Beige Book, also on Wednesday, is expected to reflect ongoing weakness in the housing market & sluggish manufacturing growth.
The US labour market remains robust with unemployment falling to 4.4% in March in spite of the declines in construction-related industries. However, weekly jobless claims have climbed in recent weeks with the four-week average expected to hit 330,000 on Thursday. Friday brings the employment cost index for the first quarter, expected to rise from 3.3% year on year in the fourth quarter to 3.8%, the highest for two years.
Germany’s industrial sector is continuing to expand strongly with the Ifo business climate index for April, due on Wednesday, expected to edge up from 107.7 in March to 107.8, not far short of December’s record high. German inflation is expected to ease back from 1.9% in March to 1.7% in April’s preliminary figures but analysts are becoming more concerned about rising core inflationary pressures across the eurozone.
Norway is expected to raise interest rates by 25 basis points to 4.25% on Wednesday as core inflation is running at its highest rate for four years while unemployment has fallen sharply, suggesting the economy is overheating.
Japan is widely expected to keep its key policy rate unchanged at 0.5% on Friday so attention is likely to focus on the outlook report to see if its forecasts for growth & inflation provide any suggestions for the Bank of Japan’s future monetary policy stance.
- Courtesy of Financial Times dated 23 Apr '07 issue
Tuesday brings UK GDP data for the first quarter with growth expected to slow from 3% year on year in the final three months of 2006 to 2.8%. Softer growth in overall consumer spending in the first quarter is likely after retail sales for February proved weaker than expected.
Manufacturing output growth has also slowed in the first quarter & the CBI’s Industrial Trends survey for April, due on Tuesday, is expected to show the volume of output measure weakening as sterling’s strength weighs on the sector.
US GDP first-quarter data, due on Friday, are expected to show growth weakening from 2.5% (annualised) in the fourth quarter to 1.7%, with the slowdown in the housing market dragging residential investment spending sharply lower.
Business investment is also likely to fall for a second consecutive quarter following weakness in core durable goods orders, down 1.9% year on year in February. The March durable goods report, due on Wednesday, is also likely to prove disappointing although higher Boeing aircraft orders will boost the headline figure.
US consumer confidence for April, due on Tuesday, is expected to fall from 107.2 to 105.0, partly as a result of higher petrol prices.
The question of whether the US housing market is stabilising remains debatable. Existing home sales for March, due on Tuesday, are expected to fall from 6.69m in February to 6.5m. New home sales sank to a 6½-year low of 848,000 in February but are expected to improve modestly to 880,000 in March’s data on Wednesday.
The Beige Book, also on Wednesday, is expected to reflect ongoing weakness in the housing market & sluggish manufacturing growth.
The US labour market remains robust with unemployment falling to 4.4% in March in spite of the declines in construction-related industries. However, weekly jobless claims have climbed in recent weeks with the four-week average expected to hit 330,000 on Thursday. Friday brings the employment cost index for the first quarter, expected to rise from 3.3% year on year in the fourth quarter to 3.8%, the highest for two years.
Germany’s industrial sector is continuing to expand strongly with the Ifo business climate index for April, due on Wednesday, expected to edge up from 107.7 in March to 107.8, not far short of December’s record high. German inflation is expected to ease back from 1.9% in March to 1.7% in April’s preliminary figures but analysts are becoming more concerned about rising core inflationary pressures across the eurozone.
Norway is expected to raise interest rates by 25 basis points to 4.25% on Wednesday as core inflation is running at its highest rate for four years while unemployment has fallen sharply, suggesting the economy is overheating.
Japan is widely expected to keep its key policy rate unchanged at 0.5% on Friday so attention is likely to focus on the outlook report to see if its forecasts for growth & inflation provide any suggestions for the Bank of Japan’s future monetary policy stance.
- Courtesy of Financial Times dated 23 Apr '07 issue
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