Neil DennisA very busy week for economic news ahead as the UK and US reveal preliminary estimates for third-quarter gross domestic product, while the European Central Bank and the Bank of Canada both make policy decisions.
While the US economy has been running at a fair pace, growth in the UK appears to be stuttering in recent months, according to purchasing manager survey evidence, consumer sentiment and retail sales.
Thursday's European Central Bank (ECB) meeting could be interesting, given indications it could announce a reduction in its asset purchase scheme, but let's look first at the growth expectations.
UK third-quarter gross domestic product (GDP)
After rising by a rather listless 0.3% in both quarters of the first half, few expect much improvement in the July-September period, during which purchasing managers became a little more subdued and retail spending was finally hit by the persistent gap between inflation and wage growth.
"Third quarter UK growth looks set to come in just as sluggish as it was in the first and second quarters," says James Knightley at ING.
He adds: "Consumer spending has remained fragile, albeit perhaps not quite as woeful as last quarter, and persistent Brexit uncertainty means investment is unlikely to pick up the mantle."
In both previous quarters, the annualised rate of growth has remained at 1.5% and economists expect another month-on-month rise of 0.3% in the third quarter, leaving the annual rate at 1.5%.
Hurricane Harvey: the impacts of both Harvey and Irma will have to be factored into third-quarter US growth: ShutterstockUS third-quarter GDP
The impact of Hurricanes Harvey and Irma need to be factored into this quarter's growth, but given the limited and temporary impact on other measures, few expect US third-quarter GDP to be materially affected.
Business activity, according to survey's from purchasing managers and the 12 Federal Reserve districts, remains strong, while consumer spending is robust, and the persistently weak dollar will have been good news for US exporters.
After a rather limp first quarter, when annual growth was just 1.2%, US GDP really gathered pace in second three months rising to an annual rate of 3.1%. Analysts believe that even with the hurricane hit annual growth will have fallen to 2.5% in the third.
Ian Shepherdson at Pantheon Macroeconomics thinks this is a too conservative estimate, however.
He says: "This is a much smaller hit that after Hurricane Katrina. We think the economy will expand by about 3%in both Q3 and Q4."
ECB to announce tapering?
Since president Mario Draghi told the markets five years ago the ECB would do "whatever it takes" to save the euro, the central bank has been conducting a masterclass in communicating its policy intentions without causing market fallout.
Whatever it takes: Mario Draghi will do whatever it takes to guide the eurozone back to policy normalisation: PixabayDraghi will be hoping he can successfully navigate the eurozone through the process of policy normalisation, and many believe that starts this week at Thursday's ECB monetary policy meeting with the announcement of a tapering of its asset purchases.
Some have suggested the ECB will extend its quantitative easing programme for nine months, while scaling back the size of monthly asset purchases by about 50%.
Few, however, expect any rate increases until late 2018 or even into 2019.
Eurozone purchasing manager indexes (PMI)
The preliminary October prints of manufacturing and services PMIs, published on Tuesday, are expected to show that eurozone business activity remained robust.
A composite index of both manufacturing and services in September came in at 56.7, matching the previous month.
Analysts expect a slight retreat in October's reading, down to 56.6, but this remains well above the 50 level that acts as the benchmark between growth and contraction.
Best of the rest
German IFO, published on Tuesday, is likely to provide some information on how German businesses viewed the recent election.
On Wednesday, the Bank of Canada holds its latest monetary policy decision, with no change expected. No changes are expected on Thursday either, when both Sweden's Riksbank and Norway's Norges Bank also make policy decisions.
On Monday, Japan releases its index of leading economic indicators for August, while the UK CBI industrial trends for October and the US Chicago Fed activity index are also published.
Caterpillar is among the US companies reporting third-quarter earnings this week: Wikimedia CommonsCorporate earnings
It's a massive week in the US with dozens of top companies reporting including, on Monday, Haliburton and Hasbro, and on Tuesday, 3M, AMD, AT&T, Caterpillar and GM. On Wednesday, we have Boeing, Coca-Cola and Visa, while on Thursday it's Alphabet (Google), Conoco-Phillips and Microsoft, followed on Friday by Chevron and Exxon Mobil.
Fewer in the UK, but some big names, including Whitbread on Tuesday, GlaxoSmithKline, Lloyds Banking Group and Metro Bank on Wednesday. On Thursday it's Barclays and Debenhams, while on Friday we have Royal Bank of Scotland.
