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The UK, US and the Eurozone in the week ahead

  • Is UK consumer confidence struggling amidst medium term economic uncertainty?
  • Building permits and PMI data likely to show US economy on an even keel
  • Uptick in Eurozone inflation could flag fresh concerns over low wage growth.


The week starts on a comparatively quiet note, with Tuesday seeing the release of Eurozone Construction Output data for August. This is expected to show another month of growth, albeit at a reduced rate, but the pace of deceleration here in light of supply chain shortages will be under scrutiny. Forecasts are calling for 1.5% but anything closer to break even may be fresh cause for concern as the economy struggles to maintain momentum,.

Also on Tuesday, US Building Permits and Housing Starts for September will be published. These are seen as barometers of US economic confidence and expectations are that numbers will come in broadly unchanged from August. That would likely be seen as reassuring, given we’re seeing some isolated signs of a slowdown across the pond.


Wednesday is set to be a hectic day for data, kicking off with German PPI readings for September. As we’ve noted before, this reflects the change in input prices paid and ultimately translates into higher sales prices or reduced margins. On an annualised basis, expectations are that the August figure of 12% will be eclipsed, although the pace of growth seems likely to be slowing. Regardless, this will act as a stark reminder of the inflationary pressures facing both Germany and the wider Eurozone.

September’s UK Inflation data is also due Wednesday and expectations are that the annualised rate may plateau at the 3.2% seen in August. That would certainly offer some welcome respite for policymakers and may be sufficient to inject some broader support into the economy, especially given the impact of rising prices off the back of supply chain problems. That said this number really needs to be read in conjunction with Friday’s Retail Sales print – expectations are for expansion, but any stalling here would present fresh concerns – and the PPI data as again any spike here could indicate that further pressures still lie in wait.

Headline Eurozone Inflation for September is also due, with a modest advance on the previous reading of 3% expected. Something under 3.5% is probably OK, but a jump higher has the potential to rattle sentiment across the Eurozone, especially given the sluggish limited pressure which has been seen on wages across the bloc.


Thursday sees Eurozone Consumer Confidence for October being released and although the reading has been trending higher over the year, coming in at -4 in September, expectations are that another deterioration will be seen here. That would align with the overlay of rising prices and stubborn wage growth, presenting fresh problems for hawkish policymakers at the ECB who are eyeing rate hikes. The Euro may see some downside pressure as a result of a poor reading here.


On Friday we have Gfk Consumer Confidence from the UK for October, which is tipped to show a modest uptick, although that’s from that less than stellar -13 print which was seen in September. Given the inflation-busting wage growth that is being recorded, weakness here points to genuine uncertainty over the medium term outlook amongst the general population.

Rounding off the week is the usual flood of PMI data for October from both sides of the Atlantic. As always, the key point to watch for here is which side of the break-even 50 mark these readings come in at. All are expected to show continued expansion, although two to watch could be UK Services PMI which is eyeing a decline from 55.4 to 54.7. Any undershoot of this would underline that idea that consumers are becoming wary as to the outlook. Similarly, US Services PMI could fall below 54, down from 54.9. The trajectory lower here is no great concern following the big spike seen in the summer, but it’s the threat of this breaking below 50 as the year draws to a close and monetary policy starts to tighten that needs to be watched.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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