October 2, 2022

UK economy heads for recession

LQDFXperts Features | UK economy heads for recession

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As the UK economy heads for recession, Liz Truss becomes Britain’s new prime minister facing inflation at 40-year highs. 

According to figures showing private sector activity fell last month as businesses struggle with soaring costs, the UK economy is on the brink of recession.

Meanwhile, separate figures from the retail industry showed a slowdown in sales growth last month as shoppers tightened their belts.

The figures come as some economists suggested Britain’s economy slipped into recession this summer.

On the energy front, the escalating row between Moscow and the West is set to occupy investors’ attention in the week ahead. Moscow vowed to keep its main gas pipeline to Germany shut. 

The European Commission has warned that a full cut-off of Russian gas supplies to Europe if combined with a cold winter, could reduce GDP across the European Union by as much as 1.5% if countries did not prepare in advance.

Federal Reserve Chair Jerome Powell is due to make an appearance before the central bank goes into its blackout period before its next meeting. 

Friday’s employment report for August was a mixed bag. While the economy added more jobs than expected, wage growth moderated, and the unemployment rate ticked higher, keeping the debate over the size of the next Fed hike.

Further, stocks will likely remain volatile as traders return after the Labor Day holiday. 

Central bank meetings and critical interest rate decisions

The week ahead will produce several critical interest rate decisions from the Bank of Canada, and Reserve Bank of Australia.

Further, the European Central Bank will deliver a big rate hike to combat soaring inflation.

The US economic calendar is light. Canada sees a wealth of releases: employment, inflation and GDP updates.

Elsewhere Q2 GDP updates for Japan, Eurozone and Canada will be eyed by markets, while inflation figures for mainland China are also released.

The Institute for Supply Management publishes its August services PMI on Tuesday, with economists expecting a reading of 55.5.

Key diary events

Tuesday 6 September

Australia RBA Interest Rate Decision

Wednesday 7 September

Australia GDP Growth Rate (Q2)

Eurozone GDP (Q2)

Canada Balance of Trade (Jul), BoC Interest Rate Decision

Thursday 8 September

Japan GDP (Q2), Eco Watchers Survey (Aug)

Australia RBA Gov Lowe Speech, Balance of Trade (Jul)

Eurozone ECB Interest Rate Decision, ECB Press Conference

United States Jobless Claims (Sep), Consumer Credit (Jul)

Friday 9 September

China Inflation Rate (Aug)

Canada Employment Change (Aug)

United States Wholesale Inventories (Jul)

Russia GDP (Q2), Inflation Rate (Aug)

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