British economic indicators will take on new scrutiny in the weeks ahead, following recent news that the UK fell back into recession during the first three months of this year—the UK's first double dip since the 1970s.
In the coming week, industrial production data for March will provide more detail about how the UK manufacturing segment has been faring. That figure, due out May 10, will add some context to mixed manufacturing reports in recent weeks.
On Tuesday, the Markit/CIPS UK Manufacturing Purchasing Managers’ Index showed that UK manufacturing sector growth softened at the start of the second quarter. The seasonally adjusted index dipped to 50.5 in April, below March’s revised reading of 51.9, but still above the neutral 50.0 mark that separates expansion from contraction. The PMI had signalled growth in each of the past five months.
That report came less than a week after the latest CBI Industrial Trends Survey showed that the UK manufacturing sector could be bouncing back from weak figures at the end of 2011 and start of 2012. Orders and output volumes showed modest increases in the three months to April, and momentum was expected to pick up in the coming months, according to the CBI’s survey of 394 manufacturers.
Consumer spending makes up about two-thirds of the US GDP, which is why two reports due out in the coming week will garner considerable interest.
On Monday, the Federal Reserve Board of Governors will release consumer credit data for March. The report will help indicate whether consumers feel confident about the US economy, which slowed during the first quarter. Consumer borrowing rose in February, albeit less than expected.
On May 11th, the University of Michigan and Thomson Reuters will release preliminary data on consumer sentiment during the month of May. Last month, just one-in-four households expected an improved financial situation during the year ahead.
Economists are looking to the April consumer price index that the National Bureau of Statistics of China will release Tuesday to see whether price increases of consumer goods are reflecting a renewal of inflationary pressures in China.
After easing in February, China’s CPI rose at an annual rate of 3.6% in March, more than the 3.3% expected. Food prices rose at an annual rate of 7.5% in March. Clothing and health care prices were also up.
One of China’s big four banks said inflation was on its way down in April. March core inflation was 3.6% year over year, so anything below that would be further evidence that China’s economy is growing below its historic speed limit, but still growing.
Private company standards
Private company and small business financial reporting concerns, which will be a hot issue throughout this month, will be a focal point of a series of US Financial Accounting Standards Board (FASB) advisory meetings in the coming week.
FASB is scheduled to hold a combined meeting with its Small Business Advisory Committee (SBAC) and its Private Company Financial Reporting Committee (PCFRC) on May 10th. In additional, separate sessions, the SBAC on May 10th and the PCFRC on May 11th will meet with FASB.
This is an important month for private company financial reporting because the Financial Accounting Foundation (FAF) trustees are expected to decide their course on private company standards during a meeting scheduled May 22nd–23rd.
FAF has proposed that a Private Company Standards Improvement Council (PCSIC) be created to recommend alterations to US GAAP for private companies. Under the proposal, the PCSIC’s recommendations would be subject to FASB’s approval.
FASB also has a project under way to create a clear, consistent definition of a nonpublic entity and plans in the second quarter of 2012 to issue a document for public discussion on its developing Private Company Decision-Making Framework.
The last in a series of public round-table meetings on revenue recognition will include officials from FASB and the International Accounting Standards Board (IASB) in Salt Lake City, Utah.
FASB and the IASB have been holding joint meetings to facilitate dialogue about the proposal, which FASB calls Proposed Accounting Standards Update (Revised), Revenue Recognition (Topic 605): Revenue From Contracts With Customers. The IASB calls the proposal Revenue From Contracts With Customers.
The core principle of the standard requires an entity to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
—From CGMA Magazine staff reports