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The UK, US and the Eurozone in the week ahead

  • UK Consumer Credit data to provide insight as to strength of economic recovery
  • US unemployment stats to highlight impact of tightening labour pool
  • Eurozone inflation and employment data will show if ECB have the balance right


Monday may be a Bank Holiday in the UK but data releases from elsewhere will include the German Inflation Flash for August. This metric has become a theme of concern for policymakers globally, although given the long run of low inflation across the Eurozone and the fact that employment appears to be rising – more on this later in the week – for the most part, the ECB appears content to let this run. There are pockets of concern amongst ECB members over the longer term implications of this reading, which is forecast to come in around 4.3%, up from 3.8% last month. Any overshoot could push the Euro into favour as it’s going to make criticism of current policies harder to ignore.


On Tuesday, the Bank of England Consumer Credit report for July will be published. Expectations here are for an increase on the £300m expansion seen in June, with forecasts suggesting a reading of around £700m will be posted. Such a number would be well received as it would indicate there’s confidence returning amongst the general population to be spending again, although this is still well below pre-COVID levels. The bigger concern would be a shortfall here, as this could flag a wider risk to the UK economic recovery and heap pressure on the Pound as a result.

Following on from the German inflation data at the start of the week, today also sees the publication of the equivalent Eurozone Flash Inflation print for August. This is expected to be a little more conservative, coming in at around 2.5%, still up from the 2.2% posted in July but a level which is far less likely to trouble policymakers. Again however, it’s an overshoot here that presents the biggest risk and could result in some heated debates as to just how long the central bank can maintain its laissez-faire approach.


German Retail Sales on Wednesday morning will fit well with this inflationary narrative. There’s an expectation that the month-on-month figure for July could lurch into negative territory, something that may prove concerning for policymakers. Suggestions that consumer confidence is ebbing out of the market at a time of rising inflation makes for a perfect storm and one that may require fiscal stimulus to address. With this in mind, it could be a choppy start to the week for the common currency and Eurozone stocks.

Eurozone Unemployment data for July will also be released on Wednesday. The number has been trending lower since hitting 8.6% last August, but there’s not much of an improvement expected over the 7.7% posted for June. Again this threads into the inflation narrative – if there’s a meaningful uptick in employment then that cuts the ECB some slack, but signs of stagnation here would be unwelcome.

Also on Wednesday we have the ADP Payroll survey from the US. This is tipped to show another strong month of jobs growth, again something that the Federal Reserve will take as proof that the current stance is working. Whilst tapering of bond buying seems imminent, the right signals here could serve to push back thoughts of US rate hike timings.


Jumping to Friday, whilst the US Non Farm Payrolls will grab the headlines it’s the accompanying labour market data which has the potential to provide greater insight. Notably, sustaining growth in Average Hourly Earnings from the annualised July print of 4% will offer some relief given the rampant state of price inflation. The Unemployment Rate will also be in focus, although with this now closing in on what could be considered frictional levels, too sharp a decline here from the 5.4% posted in July will raise concerns that a more competitive labour market will in turn end up fuelling inflation itself.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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