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.
