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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.
Industrial production data for the US, China and eurozone, plus
key trade data updates
Retail sales release in the US and China
The coming week sees monetary policy meetings at the Federal
Reserve, Bank of England and Bank of Japan, all of which are
struggling to gauge the shape of economic recoveries from COVID-19
lockdowns. The
latest business surveys indicated a further rebound of global
business activity in August but also raised concerns about the
resilience of national upturns given worries over fresh waves of
infections. The meetings will be especially important in assessing
the degree to which policymakers are prepared to tolerate higher
price pressures in order to sustain recoveries.
At the recent Jackson Hole symposium, US Fed chair Powell
already announced a new framework which allows an overshoot of the
inflation target to help ensure a robust recovery. The FOMC's
latest decision will be framed by updates to key indicators of
economic health in August in the form of retail sales and
industrial production. Both have seen growth rates fade from
initial rebounds in recent months, so policymakers will be eager to
see signs of sustained expansion. The US also publishes updated
trade data, the deficit of which has recently ballooned to the
highest since the global financial crisis (page 3).
In the UK, growth surged in August according to the PMI surveys
but many of the Bank of England's rate setters are likely to be
concerned by the labour market: the surveys also showed the rate of
job losses accelerating in August and the government's furlough
scheme is ending in October. Unemployment therefore looks set to
rise sharply which, alongside renewed lockdown measures, adds to
the risk of the recovery fading sharply. Eurozone watchers will
meanwhile eye trade and production data (page 4).
In Asia Pacific, no major change in policy is expected in Japan,
though markets will be eager to assess the Bank of Japan's view of
the strength of the upturn. News of Shinzo Abe's replacement will
also be eagerly awaited. Meanwhile, China watchers will seek
confirmation of recent survey data, showing China's economic
recovery sustaining robust momentum, from fixed asset investment,
industrial production, retail sales and employment numbers (page
5).
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.
