Week Ahead Economic Preview: Week of 10 February 2020
The following is an extract from IHS Markit's latest Week Ahead Economic Preview. For the full report (including Special Reports) please click on the link at the bottom of the article.
- US industrial production, retail sales and CPI
- US Fed semi-annual testimony
- GDP updates for the UK and Germany
- Japan GDP and New Zealand rate decision
Key releases include GDP numbers for Japan, the UK and Germany, which look set to show both European economies avoided sliding into contraction, but that Japan slipped into decline. Industrial production, retail sales and inflation data are released for the US, while policy action comes from New Zealand. US Fed chair Powell will also give the semi-annual testimony.
The US earnings season meanwhile continues with 488 companies reporting (including PepsiCo; Nvidia; Cisco systems; CME group, Adidas and Astrazeneca), as do the US primaries. Markets will of course also be eager to assess novel coronavirus developments. Global growth hit a ten-month high in January, but that was prior to the virus outbreak. Analysts are keen to get more information on the scale and impact of the virus before updating 2020 growth forecasts.
With manufacturing representing a weak link in the recent performance of the US economy (factory output fell 0.3% in the fourth quarter), official production updates for January will be important to gauge growth momentum at the start of the first quarter. Retail sales data will meanwhile provide an important further steer on GDP trends, while inflation numbers will help guide markets on upcoming FOMC decisions. A solid retail sales trend will be needed to reassure on continuing robust GDP growth at the start of the first quarter, while inflation should start to firm in coming months to meet FOMC expectations.
In Europe, fourth quarter GDP releases for the UK and Germany are expected to show downturns have been narrowly avoided, while Eurozone industrial production numbers will be eyed for confirmation of the recent green shoots seen in the January PMI data.
In Asia Pacific, Japan's fourth quarter GDP may well show the economy sliding into a downturn as weakened demand resulting from the sales tax hike was exacerbated by typhoon disruptions. Indian economic statistics will also garner attention following the recent budget announcement. Malaysia will also publish fourth quarter GDP performance while New Zealand will decide on monetary policy. The Reserve Bank is expected to remain on hold but may sound more hawkish after a recent rise in inflation.
PMI commentary: Chris Williamson
Europe commentary: Ken Wattret
APAC commentary: Rajiv Biswas and Bernard Aw
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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.
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