Next week’s economy: July 11-15

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UK economic growth the figures will be released on July 13. Will the economy contract for the third consecutive month? Maybe. But that won’t tell us much. Thanks to the Queen’s Platinum Jubilee celebrations, the late May bank holiday has been moved from its usual location to early June. This is going to make the GDP numbers for the next few months quite lumpy. Ruth Gregorysenior British economist at Capital Economics, expects Jubilee celebrations to reduce GDP growth in the second quarter (Q2) by 0.4 percentage points, but the economy will rebound in Q3.

Gregory argues that the impact “will eventually wear off”, but it will be more difficult for the Bank of England to judge the underlying health of the UK economy. Expect to see these kinds of debates reflected in the next Monetary Policy Committee tariff decision in August.

The ONS will also publish the May International exchange figures on July 13. Export growth is expected to remain stagnant, with British Chamber of Commerce latest survey of exporters pointing to continuing problems with administrative costs related to trade with the EU, pressures on raw materials and continuing problems in global shipping markets. China’s trade balance figures will be released on the same day, but will show very different factors at play. Although China’s Covid-19 cases are receding rapidly, the impact of repeated lockdowns on export production will continue to be felt in this month’s data.

Also on July 13, the BLS will release US real wage data and CPI inflation figures. Wages won’t keep pace with inflation, but they could catch up better this month. The BLS inflation figures will provide a handy breakdown of inflation rates into different categories. According to the analysis of Economy of Oxforda slowdown in commodity prices seems likely, but service prices should continue to rise.

Finally, a feeling of gloom weighs on next week’s manufacturing survey publications. We’ll see American industrial production numbers and the Empire State Manufacturing Survey 15. Economists at ING expect manufacturing surveys to come under increasing strain as managers worry about the possibility of weaker demand. Expect the ZEW Germany’s Economic Sentiment Indicator is expected to remain in negative territory on July 12, with intensified sanctions against Russia and the ECB’s shift in monetary policy adding to uncertainty.

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