China and US poised to reassure on recovery

飞雪寒冰

This week's statistics are dominated by the two largest economies – the US and China – which together account for one third of global output. A strong showing will reassure investors that the recovery in the world economy is on track.

The two countries will also be the focus of attention because of speculation about if and when China might revalue the exchange rate of the renminbi, which is currently pegged to the dollar. An understanding with the US is thought to be close following Treasury secretary Tim Geithner's visit to Beijing last week

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US inflation numbers for March are published on Wednesday. Both the headline and core measures of consumer prices are expected to be 0.1 per cent higher than the previous month, taking the annual headline rate to 2.4 per cent. Underlying annual inflation stands at 1.2 per cent, well below what would prompt the Federal Reserve to alter its policy stance in the near future.

US retail sales figures are also out on Wednesday and analysts expect to see continuing strong growth in consumer spending during the first quarter of the year. Sales are likely to be about 1 per cent higher than February levels.

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US industrial production is expected to have grown 0.6 per cent when last month's figures are released on Thursday, with capacity utilisation up to 73 per cent, which would be the ninth monthly rise in a row after the series hit an all-time low of 68 per cent last June.

While the official US data published this week are likely to be encouraging, a note of caution may come from the index of small business optimism from the National Federation of Independent Businesses, published tomorrow. This index has continued at historically low levels, a reminder that while large companies with access to credit and export markets may be thriving, smaller concerns still face tough times.

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A raft of Chinese data are due to be released on Thursday, and figures for the growth in gross domestic product during the first quarter of the year will attract most attention. Annual growth is expected to have accelerated for a fourth successive quarter to 11.6 per cent, up from 10.7 per cent in the final period of 2009, and substantially above the 6.2 per cent growth recorded a year ago.

Industrial production is expected to have grown 18.2 per cent in the year to March, up from an annual rate of 12.8 per cent in February.

Such stellar rates of growth are likely to cause overheating in the economy, so the data for Chinese inflation will be of particular interest. The annual rate of growth in consumer prices rose to 2.7 per cent in February after being in deflationary territory for most of last year, and similar growth is expected in the March numbers.

In the UK, the most significant data are the monthly trade figures for February, published tomorrow. After widening to £3.8bn in January, the trade deficit is expected to be smaller, at about £2.5bn.