Weekly outlook: UK gets an economic health check

The key events for UK wealth managers for the week starting 11 November

The UK gets an economic health check this week as third quarter GDP, unemployment, wage growth and inflation figures are all published. Elsewhere, Germany is expected to reveal whether or not it has slipped into recession and investors will be monitoring whether the US recovers from its September retail sales blip.

Monday 11 November

– UK Q3 gross domestic product

Canaccord Genuity Wealth Management investment manager and international equities analyst Dan Smith said despite all the Brexit uncertainty, the UK economy looks set to avoid a technical recession, defined as two successive quarters of negative GDP growth.

“The economy contracted over the second quarter, putting the UK on course for its first technical recession since the global financial crisis. However, the dominant service sector, which accounts for around 80% of growth, continues to be benefit from a resilient labour market and robust household spending which should see the economy expand over the third quarter of the year.”

– UK industrial and manufacturing production

– Tatton Asset Management interim results

 Tuesday 12 November

– UK unemployment and wage growth figures

AJ Bell investment director Russ Mould noted August’s unemployment rate came in at 3.9%, up from 3.8% but still near 45-year lows, and wage growth reached 3.8% year-on-year, including bonuses.

“One stat that may be worth watching is the number of job vacancies,” he added. “This peaked in January at 861,000 and has since dipped to 813,000, which may suggest the economy is slowing down.”

– Germany Zew Survey data on economic sentiment

 Wednesday 13 November

– UK inflation figures

Mould said September’s inflation figures were CPI at 1.7%, the Bank of England’s CPIH index, its preferred measure, which includes housing costs was 1.7%, and RPI was 2.4%. This meant that wage growth continued to outstrip inflation.

“This is good news for consumers, as it puts more cash in their purses and wallets. It could therefore be good news for consumer-related stocks, too, if the trend continues.”

– Germany inflation figures

– US inflation figures

– FCA consultation paper, Regulatory fees and levies: Policy proposals for 2020/21

Thursday 14 November

– German Q3 GDP

Smith said the eurozone’s powerhouse, Germany, is expected to slip into a recession for the first time since March 2013. The economy declined by 0.1% in the second quarter of the year and data since then has remained weak.

“The export-orientated manufacturing sector has continued to weaken and there is increasing evidence that this weakness is spreading to the more resilient parts of the economy, like the service sector. The more challenging issue for investors is establishing whether the slowdown in activity will prove to be temporary or more long-lasting.”

– Rics UK housing market survey

– UK retail sales

Friday 15 November

– US retail sales

US retail sales fell for the first time in seven months in September,  with the unexpected decline raising concerns that the weakness in the industrial sector was influencing other parts of the economy, said Smith. However, September’s decline looks like a blip as the US consumer is in a reasonably healthy shape.

“A steady rebound in retail sales in October should reinforce this view, which alongside signs of progress in US-China trade talks and a bottoming in manufacturing activity, should see investors maintain their cautiously optimistic outlook for the US economy heading into 2020,” said Smith.

– EU inflation

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