The Week Ahead: Will there be further taper talk from the ECB?

calendarThe European Central Bank meets this week with some economists expecting members to further lean towards a QE tapering announcement in October. In the UK August data from the services sector is released on Tuesday while manufacturing and industrial data for July will be published at the end of the week.

Fund Strategy looks at some key events shaping the week and what to expect.

Monday 4 September

  • UK construction PMI – Markit/Chartered Institute of Procurement and Supply
  • EU Producer Price Index

Tuesday 5 September

  • UK Services PMI, September – Markit/Chartered Institute of Procurement and Supply
  • PMI covering services, the euro area, US, China – Markit, ISM, Caixin

The Share Centre investment research analyst Graham Spooner says: “While the PMI tracking UK manufacturing looked quite healthy last month, the PMI for construction fell to an 11-month low. But the services sector is vital to the UK economy. Last month the Business Activity Index, tracking services, rose from the month before to 53.8, but even so, the index pointed to slower growth than the post-crisis trend. Together the three indexes pointed to growth of just 0.3 per cent. Did August do any better?

Wednesday 6 September

  • Barratt Developments (Final results)

Spooner says: “The last trading update in July stated that full-year profits would be ahead of market expectations at £765m, helped by a rise in the price of homes sold and cost cutting.
“The market will be interested to hear if average selling prices have continued to rise and whether market conditions in London remain weak. Investors will also focus on any signs that the company is still cautious about buying further land for development, as has been the case for some time.”

Thursday 7 September

  • Halifax House Price Index– Markit
  • ECB monetary policy meeting in Frankfurt

Friday 8 September

  • Construction output in Great Britain and UK index of production: July 2017 – Office for National Statistics.

Spooner says: “In July, the goods and services trade deficit rose to £4.6bn, while construction output fell 0.1 per cent on the month before and by 1.3 per cent quarter on quarter. As for industrial production, this did increase by 0.5 per cent month on month, but fell by 0.4 per cent quarter on quarter, while manufacturing output saw zero growth month on month and 0.6 per cent contraction, quarter on quarter: altogether, a woeful set of figures.
“However, recent purchasing managers indexes pointed to a pick-up in manufacturing output and a big jump in exports, although they pointed to harder times for construction. Will the official data reflect the more optimistic findings of the purchasing managers indexes?”