It is almost an impossible task to pick out a theme in a week packed with data releases from both sides of the Atlantic. However, the US employment figures on Friday will be of crucial importance to markets if further weakness ensues.
The European Central Bank's comments on the effect of high oil prices on the outlook for inflation and growth on Tuesday will be noteworthy, along with its later decision on interest rates where no change is expected.
Figures on US personal consumption and income in July due on Monday will be of interest after the June report was much weaker than expected with a fall in real consumer spending pointing to a weak start for the third quarter.
The US consumer confidence data for July reported an unexpectedly strong surge but the figures for August, due on Tuesday, are expected to weaken. The correction is due in part to higher petrol prices and also to the disappointing weakness in the US labour market.
Non-farm payrolls expanded by only 32,000 in July, the weakest month this year and another disappointing month would be a challenge to the view of Alan Greenspan, Federal Reserve chairman, that weakness in the US economy will prove short-lived. The employment component of the US non-manufacturing ISM survey fell sharply to 50, the no-change level, in July and another decline in August would be worrying.
The purchasing managers' reports are due this week; manufacturing on Wednesday and services on Thursday. One of the key themes will be the impact of higher crude oil and commodity prices on manufacturers' input costs and how fully they are able to pass these on to customers. The reassuring message from the eurozone was that activity was continuing to pick up in both manufacturing and services and that a relatively better performance from the German economy suggested it could be starting to catch up with that of France.
The Bank of England appears confident that its policy of gradually raising interest rates is cooling the housing market while not suffocating recovery in manufacturing. On Tuesday the Bank will publish July figures on household borrowing, which are expected to show a pronounced drop in consumer credit. The CBI's distributive trades survey on Tuesday is widely expected to show wet weather contributing to weaker retail spending, particularly on clothes. The latest round of house price figures will be scanned for further signs that the housing market is cooling. The figures for July from Nationwide were strong, with prices rising at 20.3 per cent year-on-year, but a weaker market is expected for August. Prices have started to fall in some areas.
Eurozone releases on Monday include retail sales figures for Italy in June. Retail sales figures for Spain in July are due on Tuesday, and for the eurozone in July, are due on Friday. These will be vital for any indications of a recovery in consumer spending as a prelude to a rise in the growth of domestic demand. The flash estimate for eurozone inflation is due on Tuesday, the consensus estimate suggesting inflation will ease from 2.4 per cent in July to 2.3 per cent in August. No change is expected in the eurozone interest rate on Thursday. We can expect further reassurances from the ECB about the ability of the European economy to cope with the effects of high crude prices on activity and inflation.