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IHS Markit flash PMI survey to add substance to FOMC policy
expectations
Eurozone flash PMI eyed for signs of economic health as ECB
ramps up QE exit
BOJ monetary policy meeting amid PMI and inflation updates
IHS Markit flash PMI surveys will provide early insights into
the performance of major economies at the end of the third quarter,
in a week in which the main monetary policy action comes from
Japan.
US PMI surveys to add to FOMC guidance
With another Fed rate hike widely touted for later in the month,
the US dataflow will be watched closely for potential dampeners on
the FOMC's appetite for tighter policy, especially any signs of
detrimental impact from escalating trade wars. The flash PMI survey
data from IHS Markit will help by firming up the survey's GDP
signal for the third quarter, which is currently running at just
under 3% annualised. However, the August PMI data also showed some
loss of growth momentum, especially in the manufacturing sector.
Tariffs and trade war worries were reportedly driving up prices and
hitting supply availability, all of which will concern the Fed.
Eurozone PMI
With the ECB moving towards halting its asset purchases by the
end of the year, policymakers will be hoping that the flash
Eurozone PMI update will send a more convincing signal of robust
economic health after mixed signals in August. Although the
headline PMI rose to indicate that the region is on course for
another quarterly GDP expansion of 0.4-5%, business optimism about
the year ahead dropped to the lowest for almost two years,
reflecting growing concerns about the impact of trade wars, rising
prices and heightened political uncertainty.
Furthermore, the upturn looked increasingly uneven. Although
robust growth was again seen in the core countries of France and
Germany, Spain and Italy were notable in reporting slower rates of
expansion. Price pressures also varied markedly across the region,
ranging from near-record inflation in Germany to falling prices in
Italy.
Japan PMI, CPI and monetary policy
In a week which sees the Bank of Japan meet to set monetary
policy, analysts will be watching Japan's PMI and inflation data
especially keenly for clues of future monetary policy. The
consensus is for mild annual growth of 0.9% in core inflation, the
central bank's preferred price gauge.
Markets will be looking for guidance on monetary policy at the
Bank of Japan, though no change is expected after the central bank
tweaked policy in July. Rates on government bonds are now allowed
to trade in a wider band as the government seeks to scale back its
vast asset purchase programme, though the Bank also helped drive
the yield down through additional purchases and reiterated that
interest rates are unlikely to rise for "quite some time". The BOJ
is expected to voice particular concern about global trade issues
amid signs of slowing export demand, with the latest PMI surveys
indicating that export growth has faltered dramatically. The flash
Nikkei Japan Manufacturing PMI will therefore be eyed for an
updated view into manufacturing and trade performance in
September.
Download the article for a full diary of key economic
releases.
Chris Williamson, Chief Business Economist, IHS
Markit
Tel: +44 207 260 2329
chris.williamson@ihsmarkit.com
Posted 14 September 2018 by Chris Williamson, Chief Business Economist, IHS Markit
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
