Week Ahead 28 November

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This week is all about confidence - manufacturing and construction PMIs on Friday and GfK consumer confidence index on Wednesday.

Manufacturing PMI

The UK manufacturing PMI is due on Friday. After large swings immediately following the Brexit vote, the indicator has stabilised at a relatively high level in recent months. In October, UK manufacturing PMI printed 54.3, well above the 50 no-change mark and 0.7 percentage points higher than its long term average. This reflected firming business confidence regarding the UK economy as fears of a Brexit-related slowdown were shrugged off after the publication of GDP growth in the third quarter. This was underpinned by an improvement in global manufacturing activity as suggested by the jump in PMIs in the UK's major trading partners. This trend is likely to continue in November, and we expect manufacturing PMI to strengthen slightly this month.

Consumer Confidence

The GfK consumer confidence index is due on Wednesday. Although the indicator has held up so far, consumers are likely to be fishing in troubled waters for the months ahead. Indeed, the pickup in consumer price inflation is likely to reduce households' disposable income and affect their confidence about the UK economy. How quick this will happen remains unknown, however. The GfK index should be an early indicator of such shifts.

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