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Week beginning Monday 3 December

The week will be dominated by the chancellor’s Autumn Statement tomorrow, the miserable state of the public finances and the missed forecasts.

On the economic front, survey evidence is expected to indicate that services activity and retail sales will show a pick-up in November after a difficult October. This is important if the economy is to avoid a ‘triple dip’.

The week has got off to a modestly encouraging start. The manufacturing purchasing managers' survey (PMI) out yesterday was slightly better than expected.

Manufacturing output figures due on Friday are expected to show a fall of 0.2% month-on-month in October.  Overall, says Howard Archer of Global Insight, industrial production should have rebounded 0.9% month-on-month in October, having plunged by 1.7% in September. Even so, industrial production would still be down by 0.5% year-on-year in October. The uplift is due to a rebound in oil and gas extraction after a record 20.9% month-on-month plunge in September due to maintenance work.

On the domestic demand front, retailers will be looking for evidence of a significant pick-up in sales from October’s weakened levels.  Data from the Office for National Statistics (ONS) showed that retail sales volumes fell back by 0.8% month-on-month in October after a 0.5% month-on-month rise in September.

The Confederation of British Industry has already released its distributive trades survey for November. This showed that the balance of retailers reporting that sales were up year-on-year year improved to +33% in November from +30% in October and +6% in September. November’s reading of +33% was well above the monthly average of +10% during the first 11 months of 2012. This, says Archer, was also the second highest reading (after +42% in June) since January 2011. The CBI survey also indicated that retailers are pretty upbeat about sales prospects for the critical month of December with a balance of +25% expecting sales to be up year-on-year.

The construction purchasing managers’ survey due today is likely to point to a still struggling construction sector. We expect the business activity index to have edged back to 50.5 in November after rising to 50.9 in October.  This would keep the index marginally above the critical 50.0 level that is meant to indicate unchanged activity. While the October survey pointed to overall construction activity edging up for the first time since July, this was entirely due to expansion in civil engineering activity outweighing ongoing falls in house-building and commercial activity. Worryingly, new orders contracted for a fifth month running in October.

The total trade deficit  due on Thursday) is expected to have widened to £3.2 billion in October after narrowing to £2.7 billion in September from £4.3 billion in August. The trade deficit has been even more volatile than normal in recent months as it has been buff

House price data from the Halifax should show a modest rise in November after falls over the previous four months. Howard Archer, a notable sceptic of house price recovery, expects the Halifax to report that house prices rose by 0.2% month-on-month in November, which would still leave them down by 1.8% year-on-year in the three months to November.