A gloomy picture of a fast-weakening economy will be painted by a raft of data out this week. Economists warn the fallout from more policy developments and continuing financial turmoil will eclipse all previous bad news about how the downturn has hit employment, housing and consumer spending.
Unemployment figures published on Wednesday are expected to show a rise in the number of those out of work for the eighth month running. Paul Dales of Capital Economics expects the number on unemployment benefit to rise by 35,000 in September, taking the total increase since the trough to 140,000. “At this rate, the claimant count will have hit 1m by the end of the year.”
Shops are expected to paint another gloomy picture of high street demand on Tuesday when the British Retail Consortium publishes its monthly survey, which measures annual growth of like-for-like sales. Economists say recent official retail sales figures have looked implausibly strong, so policymakers and analysts are placing greater weight on the surveys.
The Royal Institution of Chartered Surveyors’ Tuesday survey is expected to show a further fall in house prices. It follows a report last week by Halifax, part of HBOS, Britain’s largest mortgage provider, which showed house prices falling at their sharpest annual rate for at least 25 years. The lack of mortgage finance and the pressures on household income continue to hamper recovery, economists say.
One bright spot in this week’s economic news could be welcome evidence that inflationary pressures are starting to ease. Monday’s figures for producer input and output prices should reassure policymakers that a prolonged period of high inflation is no longer a big source of worry.
September’s falling oil prices should cut producers’ raw material costs, while the recent sharp weakening of demand will also help curb output price inflation.
September’s consumer price figures, due on Tuesday, will reflect the recent increases in gas and electricity prices, pushing expected consumer price inflation up to about 5 per cent. But sliding oil prices and a sharp economic downturn are expected to push inflation back down.