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The following is an extract from IHS
Markit's latest Week Ahead Economic Preview. For the full report,
please click on the 'Download Full Report' link.
Flash PMIs for the US, Eurozone, Japan, UK and Australia
The coming week sees policy meetings at no fewer than ten
central banks, including the FOMC, plus a wealth of data releases
which will help steer views on current economic growth, employment
and inflation trajectories.
Central banks line up to set policy in the US, Japan and UK, as
well as in Russia, Switzerland, Norway, the Czech Republic, the
Philippines, Indonesia and Mexico. Policymakers will be seeking to
balance a brightening economic outlook following the development of
Covid-19 vaccines, which have raised prospects of life moving
closer to normal over the course of 2021, against signs of further
long-lasting damage from the pandemic. While rising price pressures
will be largely 'looked through', markets will also be eager to
asses just how much inflationary pressure is judged to be in the
pipeline.
The problems facing policymakers are encapsulated in
recent PMI data, flash numbers for which are updated during the
week. The November PMIs showed the global economic recovery losing
momentum as further waves of Covid-19 hit many countries, but
prospects for the year ahead surged to the highest for over six
years, mainly reflecting vaccine hopes. Supply delays were
meanwhile cited as having pushed
goods prices higher at a rate not seen for two years.
In the US, the FOMC meets for the first time since the
Presidential elections and the encouraging news on vaccine roll
outs, though the outlook remains clouded by uncertainty over the
pandemic stimulus. Clarity is also needed on whether the economy
has been hit again by rising Covid-19 infection rates, meaning the
flash PMIs will be closely watched as the first indicators of
national economic trends in December.
In the UK, the PMI data will give an insight into whether growth
has been regained after November's lockdowns, accompanied by
official labour market and retail sales numbers. The data carry
additional weight ahead of the MPC meeting, which comes alongside
mixed views among policymakers on the resilience of the
economy.
Flash Eurozone PMIs will meanwhile give added insight into how
severe a fourth quarter downturn might be, given the additional
measures implemented to fight the pandemic in recent weeks. The
strength of Germany's manufacturing sector, which has shown
encouraging buoyancy, will be under particular scrutiny.
In Asia, China's economy is in focus with key official data such
as industrial production and retail sales updated. The releases
follow news from the Caixin PMI that business activity grew in
China during November at the fastest rate for over ten years.
Japan, in contrast, is seeing a far more muted economic recovery,
according to the PMI, for which December flash data will be updated
during the week.
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.
