The global economic picture this week is expected to show weaker job numbers, waning confidence and falling industrial output as the war in Iraq weighs on business and consumer decisions.

The first quarter ends today, and has seen the pan-European share index drop 10 per cent, the London stock market by 5 per cent and Wall Street by 3 per cent. However, stock markets are off the lows touched before the war in Iraq started.

As the US and UK count the growing budgetary costs of war, policy makers are still assessing its impact on their economies.

The US unemployment rate for March is expected to be close to 6 per cent in employment data due on Friday. Economists are forecasting the figures to rise between 50,000 and 100,000 as companies continue to cut staff numbers.

Job prospects are unlikely to improve in the short term with two key surveys for the manufacturing and services sectors expected to show activity declining.

The Institute for Supply Management's manufacturing index, released tomorrow, is expected to slow for the third consecutive month, dipping below the 50 threshold, which divides expansion from contraction, for the first time since October.

The ISM non-manufacturing survey is forecast to fall to its lowest point since January 2002, at just above 50.

Unemployment in Germany, Europe's largest economy, is also set to rise to 10.6 per cent from February's 10.5 per cent, with an extra 110,000 jobless. The job statistics will be released on Thursday.

This rise will worry European Central Bank members, who meet the same day. The ECB is unlikely to change key rates after last month's quarter point cut to 2.5 per cent.

ABN Amro predicts another half point cut by the end of June, whereas fixed interest investors have only priced in a quarter point cut.

The Bank of England's monetary policy committee has delayed its meeting until Thursday week, a day after the UK budget.

- (Financial Times Service)