The housing market survey for July from the Royal Institute of Chartered Surveyors (out overnight on Monday/Tuesday) is likely to show that housing market activity continues to trend up, as buyer interest is supported by very low mortgage interest rates and the substantial overall fall in house prices from their 2007 peak levels. The survey is likely to reveal that buyer enquiries increased for a ninth month in a row in July, and at a healthy rate. This is expected to feed through into a fourth successive rise in completed sales per surveyor, although these will likely still be well below long-term norms. We expect the balance of surveyors reporting that house prices increased over the previous three months to have risen to -10% in July, after jumping to -18.1% in June from -43.8 in May and the 2009 low of -77.8 in February.

Meanwhile, the Department for Communities and Local Government's house price index (out on Tuesday) is likely to show that the year-on-year fall in house prices moderated further in June after slowing to 12.5% in May from the peak decline of 13.6% in March.There has been a stream of data and survey evidence out recently indicating that house prices have at least temporarily bottomed out and are firming. Given ongoing tight credit conditions, still relatively poor economic fundamentals, and the fact that affordability ratios are starting to move back up, we suspect that house prices are highly likely to suffer relapses over the coming months. Much will clearly depend on whether the economy can sustain a likely return to growth in the third quarter; how much further unemployment rises; how quickly and to what extent credit conditions ease; and how many properties come on to the market over the coming months. We doubt that the economy will be able to develop significant sustainable recovery until around mid-2010, and suspect that unemployment will rise markedly further and wage growth will remain low, which does not bode well for house prices.

The British Retail Consortium (BRC) retail sales monitor for July (also out overnight on Monday/Tuesday) is expected to show firmer retail sales compared to earlier this year. The last BRC survey showed that total retail sales rose 3.2% year-on-year in June, which was up from growth of 0.8% in May. On a like-for-like basis, retail sales rose 1.4% year-on-year in June, after falling 0.8% year-on-year in May. Retail sales were lifted in June by the very good weather that month, but July could see a similar performance judging by the CBI distributive trades survey that has already been released.

With sharply reduced mortgage payments, lower utility bills, and retreating inflation boosting purchasing power, it seems that a good many people are currently more able and more willing to step up their discretionary spending. Nevertheless, we believe that the upside for consumer spending is likely to remain limited for some time to come. Significantly, consumers remain under serious pressure from sharply higher and rising unemployment, markedly reduced earnings growth and heightened debt levels. Furthermore, many consumers are keen to limit their expenditure due to ongoing serious concerns about the economy and jobs, as well as a need/desire to improve their personal finances. Meanwhile, credit conditions facing consumers are still tight.

The trade deficit (out Tuesday) is expected to have widened modestly to £2.4 billion in June, after narrowing sharply to a 2009-low of £2.2 billion in May. This would still be clearly below the average monthly deficit of £2.7 billion in the first five months of 2009, and substantially below the average monthly shortfall of £3.2 billion in 2008. There are some signs that the sharp overall depreciation of sterling is providing increased support to U.K. exporters, although the upside for exports continues to be limited by muted domestic demand in key foreign markets—notably, the Eurozone and the United States. Meanwhile, imports are being limited by muted U.K. domestic demand, while there may also be some import substitution occurring due to the overall marked depreciation of the pound pushing up the price of foreign produced goods.

Data out on Wednesday are expected to reveal that unemployment is continuing to rise significantly sharply on the International Labour Organization (ILO) measure, which currently appears to be giving a truer picture of the labour market than the much narrower claimant count measure. Indeed over the summer months, there are likely to be a lot of students who have just left college or school and cannot get a job, thereby going straight into unemployment. These do not show up on the claimant count data, as they are not eligible for benefits. We suspect that the number of unemployed on the ILO measure could well have risen by close to 250,000 in the three months to June after surging by a record 281,000 in the three months to May. This would take the number of unemployed on the ILO measure almost up to two-and-a-half million and push the unemployment rate up to 7.8%. Unemployment still looks highly likely to rise above three million in 2010. Despite mounting signs that the economy will return to growth in the third quarter, unemployment is a lagging indicator and the sharp economic contraction suffered between the second quarter of 2008 and the second quarter of 2009 will continue to weigh down on the labour market for an extended period. Furthermore, even if the economy does return to growth in the third quarter, activity is still unlikely to be strong enough for some considerable time to come to prevent further net job losses. In fact, we suspect that unemployment will rise for the rest of this year and much, if not all, of 2010. Meanwhile, we expect claimant count unemployment to have risen by 32,000 in July, after increasing by a surprisingly low 23,800 in June. This would take unemployment on this measure up to 1.59 million and the claimant count unemployment rate up to 4.9%.

Meanwhile, average earnings are expected to have risen by a modest 2.5% year-on-year in the three months to June, as they were limited by reduced bonus payments. In addition, underlying average earnings are under serious downward pressure from sharply higher and rising unemployment, heightened job insecurity, negative retail price inflation, and the need for companies to contain their costs in the face of muted demand. Consequently, annual underlying average earnings growth (excluding bonus payments) is seen remaining at 2.6% in the three months to June, which is the lowest level since the series began in 2001. These rates compare with the 4.5% level that the Bank of England considers broadly consistent with its 2.0% consumer price inflation target.

11 Aug - Visible Trade Balance, June (GBP/Mn): -6.4
11 Aug - Non-EU Visible Trade Balance, June (GBP/Mn): -3.4
11 Aug - Total Trade Balance, June (GBP/Mn): -2.4
11 Aug - British Retail Consortium Monitor Total Sales, July (Year-on-Year): not forecast
11 Aug - British Retail Consortium Monitor Like-for-Like Sales, July (Year-on-Year): not forecast
11 Aug - RICS House Price Balance, July: -10%
11 Aug - DCLG House Prices, June (Year-on-Year):| not forecast
12 Aug - Claimant Count Unemployment Rate, July (%): 4.9%
12 Aug - Claimant Count Unemployment Change, July (000s): +32K
12 Aug - International Labour Organization Unemployment Rate, June (%): 7.8%
12 Aug - Average Earnings including bonus, June (3-Month/Year): +2.5%
12 Aug - Average Earnings excluding bonus, June (3-Month/Year): +2.6%