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Home » News » Economics » The Week Ahead » The UK, US and the Eurozone in the week ahead
  • US job openings and PPI could re-ignite inflation concerns
  • ECB’s reaction to decade high Eurozone inflation will be under scrutiny
  • UK GDP data tipped to continue trend of normalisation


The week starts with UK Construction PMI data for August being released. Having managed steady gains throughout the first half of the year before hitting an all time high of 66.3 in June, the July print saw sentiment reverse and another decline is expected in the August reading. Critically this is still expected to come in around 55 and comfortably above the break-even 50 level, but the pace of decline here could be a cause for concern, especially with interest rates still at historical lows.

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In the early hours of Tuesday (UK time) the Reserve Bank of Australia will publish its latest rate call. Like other major economies, inflationary pressures are being seen, but there’s no intention of hiking base rates. QE tapering has already started but with the Australian economy still struggling against COVID lockdowns, even a suggestion that borrowing costs could rise would have the potential to knock confidence. Expect a message of maintaining an even keel to be released.

The ZEW Sentiment Index for September will be released from Germany also on Tuesday. The forward-looking aspect of this news makes it a valuable print and forecasts are suggesting we’ll see a number come in just below 30. That’s down from 40.4 in August and well below the 84.4 seen in May, but it’s worth bearing in mind that longer term averages see this reading sitting around the 20 mark. Within reason, any decline here should be seen as nothing more than a mean reversion after a volatile 18 moth spell.


Wednesday sees the JOLT Job Openings for July being released from the US. Having crested 10 million vacancies in June, hopes are that a reversal in the trend will be realised here. Failure to achieve that has the potential to fuel inflationary pressures and reignite the conversation as to whether the Fed should be doing more, something that could boost the dollar and weigh on stocks.


Thursday’s release of Chinese PPI data for August will be on the radars of many. Given the volume of goods coming out of China, factory gate inflation here will have an inevitable knock on effect elsewhere. For the last three months, this reading on an annualised basis has been around the 9% mark and there’s no real expectation that any change will be seen in this latest release. In the event this number does push towards the 10% mark then that could serve something of a shock to markets, which it seems apparent on a global basis still can’t countenance tighter monetary policy.

Also on Thursday, the ECB Monetary Policy meeting concludes with a press conference. This will again be under scrutiny with Eurozone inflation having just reached a decade high of 3% in the last few days, but with policymakers in Frankfurt confident that this is still a transient influence there seems little suggestion a change in stance will be seen. Regardless, the tone of any response here will be dissected closely as the market probably looks to find any proverbial red lines that the ECB needs to avoid.


Friday sees the release of the latest UK GDP data, covering both July and the three month average. The former is expected to drop from 15.2% to under 9% on an annualised basis, whilst the latter could decelerate from the 4.8% posted a month ago down towards 4%. Again this is unlikely to cause much anxiety, so long as the pace of decline is measured. There was always an acknowledgement that the recovery bounce would be spiky in its nature.

Rounding off the week we have US PPI Data, which – as with the Chinese equivalent – provides a key early warning of broader inflationary pressures. Rising input costs combined with wage inflation does make for a potentially toxic mix, so any overshoot of the forecast 8.3% – another all time high for the series – could put the Fed’s stance over policy tightening back into the spotlight and may in turn fuel interest in inflation-hedging assets.


This article is not investment advice. Investors should do their own research or consult a professional advisor.

Tony Cross

Tony Cross

Tony Cross is a market commentator with over 15 years of experience, producing compelling, insightful copy for journalists and investors alike. Focusing on macroeconomics, UK blue chip equities and inter market analysis, Cross's commentary is well regarded for its clarity and ability to cut through the waffle. He has been quoted in publications as diverse as The Financial Times, The Times, The Guardian and The Sun. He has also been a regular guest on both Share Radio and TipTV.

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