UK data this week will highlight the growing impact of the recession on consumers, as increased uncertainty and rising unemployment change their saving and spending patterns.
UK detailed GDP in the spotlight
UK data this week will highlight the growing impact of the recession on consumers, as increased uncertainty and rising unemployment change their saving and spending patterns. The first view of the expenditure components of Q1 2009 GDP are published on Friday, with another sharp fall expected in consumer spending, while changes to the methodology used by the ONS to calculate retail sales volumes pose a downside risk to figures for April due on Thursday.
News on Tuesday that inflation edged lower again in April, with annual RPI estimated to fall to -0.8%, may provide little comfort. The minutes of the Bank of England MPC meeting on 6-7 May should underline the predictions in last week’s Inflation Report of a large negative output gap, helping to explain the committee’s decision to increase the asset purchase programme by £50bn to £125bn, as the risk of deflation remains high.
The minutes of the 29 April US FOMC meeting are also published on Wednesday. After the very weak euro zone GDP data for the first quarter, there will be keen interest in the flash PMI figures for May on Thursday, where we expect a modest rise in both the manufacturing and services indices. However, they remain well below the 50 level, indicating contraction.
The first estimate of Japan Q1 2009 GDP on Wednesday could potentially show a fall of over 5% q/q. The BoJ meets on Friday, when we expect the overnight rate to stay at 0.1%, however other policy measures are possible. Key speakers this week include Fed chairman Bernanke and US Treasury Secretary Geithner.