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The following is an extract from S&P Global Market
Intelligence's latest Week Ahead Economic Preview. For the full
report, please click on the 'Download Full Report' link.
April flash PMIs, China Q1 GDP and data barrage in focus
Flash PMIs released in the coming week across
major developed economies offer a first look into the degree to
which these countries have been affected by the Ukraine war and
China lockdowns so far in April. Data out of China
including Q1 GDP, March retail sales and industrial
production will also offer clues on the impact of the
stricter COVID-19 restrictions on economic activities. Meanwhile
Canada and the eurozone update inflation figures
while policymakers at Bank Indonesia meet in the
week.
Midway into April, concerns over geopolitics, the global macro
economy and monetary policy remain at the top of investors' minds
as seen through the lens of the latest April
S&P Global Investment Manager Index. The survey shows US
equity market returns in the next 30 days are expected to remain in
negative territory. With that said, we did find western economies,
notably including the US, faring well in March on the back of
easing COVID-19 containment measures that buoyed services
performance. Worries over demand destruction as a result of
heightened price pressures had also been temporarily allayed for
the likes of the US and UK. Whether this can continue into April
remains to be seen, especially with China's deteriorating virus
conditions having added to supply concerns.
Likewise across in APAC, Japan felt the heightened price
pressures in March due to the COVID-19 disruptions in China.
Although inflationary pressures were not as severe for APAC
economies compared to their western counterparts, business
confidence was adversely affected, and signs of any feed through of
the darkening mood into actual output and demand changes will be
eagerly assessed in next week's data.
Finally, official China's Q1 GDP growth and March retail sales
and industrial production data will be in focus after the latest
Caixin PMI readings indicated that both the manufacturing and
service sectors contracted at the fastest pace since the pandemic
first began.
April flash PMIs: demand resilience facing tough headwinds
Flash PMI's will provide the first indications of economic in
April, with insights into a number of issues eagerly awaited.
March data had shown the US and UK being buoyed by the further
reopening of these economies from COVID-19 health restrictions, but
growth in the eurozone had been subdued by the Ukraine invasion
while mainland China sank into a steep decline amid fresh lockdown
measures. Rising prices meanwhile remained prevalent, leading to a
worsening inflation outlook, likely to have bene exacerbated
further in April by the twin effects of China's new lockdowns and
the Russia-Ukraine war.
The global economy is therefore facing numerous headwinds, with
the ongoing pandemic and war in Europe adding to supply delays and
inflationary pressures, the latter not only severely dampening
consumer sentiment around the world as well as pushing central
banks into more hawkish stances.
Key to the outlook will therefore be the degree to which demand
can remain resilient in the face of these headwinds. Global service
sectors are likely to be buoyed by the tailwind of the further
easing of travel restrictions, but are higher prices starting to
destroy demand? One insight here is the number of PMI survey
respondents globally who report that their output is being buoyed
by 'rising' or 'recovering' demand. So far this year, this has
fallen to the lowest since the pandemic upturn began in the second
quarter of 2020, lifting only modestly in March from the
Omicron-induced weakness seen at the very start of the year. These
data suggest much of the boost to demand from the pandemic opening
up has now faded, hinting at weaker growth in coming months.
Key diary events
Monday 18 Apr UK, Germany, Australia, Switzerland, Norway, New Zealand, China
Market Holiday
Singapore Non-Oil Exports (Mar)
China (Mainland) Retail Sales, Industrial Output, Urban
Investments, Trade Balance (Mar)
China (Mainland) GDP (Q1)
Indonesia Trade (Mar)
Malaysia Trade
United States NAHB Housing Market Index (Apr)
Tuesday 19 Apr
Australia RBA Meeting Minutes (Apr)
Eurozone Reserve Assets Total (Mar)
Canada House Starts (Mar)
United States Building Permits and Housing Starts (Mar)
Indonesia 7-Day Reverse Repo (Apr)
Wednesday 20 Apr
Japan Trade (Mar)
Germany Producer Prices (Mar)
Taiwan Export Orders (Mar)
Eurozone Industrial Production (Feb)
Canada CPI (Mar)
United States Existing Home Sales (Mar)
Thursday 21 Apr
New Zealand CPI (Q1)
Eurozone HICP (Mar, final)
United Kingdom CBI Distributive Trades (Apr)
United States Initial Jobless Claims
United States Philly Fed Business Index (Apr)
Eurozone Consumer Confidence (Apr, flash)
US Fed Beige Book
Friday 22 Apr
Australia S&P Global Flash PMI, Manufacturing &
Services*
Japan au Jibun Bank Flash Manufacturing PMI*
UK S&P Global/CIPS Flash PMI, Manufacturing &
Services*
Germany S&P Global Flash PMI, Manufacturing &
Services*
France S&P Global Flash PMI, Manufacturing &
Services*
Eurozone S&P Global Flash PMI, Manufacturing &
Services*
US S&P Global Flash PMI, Manufacturing & Services*
Japan CPI (Mar)
Thailand Customs-Based Trade Data (Mar)
United Kingdom Retail Sales MM (Mar)
Taiwan Jobless Rate (Mar)
Canada Producer Prices (Mar)
Canada Retail Sales (Feb)
* Press releases of indices produced by S&P Global and
relevant sponsors
can be found here.
What to watch
Flash PMI release for April
April's flash PMI surveys offer a first look into the health of
major developed economies at the start of the second quarter,
including the US, UK, eurozone, Japan and Australia.
March PMI data showed divergences in performance between
western economies, with the US and UK benefitted from the easing of
COVID-19 restrictions while the APAC region suffered the effects of
worsening supply constraints on the back of the Omicron variant's
spread, notably in mainland China. Amid the persistent
uncertainties brought about by both the prolonging of the Ukraine
war and deterioration of virus conditions in China, April's data
will be scrutinised for lingering effects. Specifically,
sub-indices such as price indicators,
suppliers' delivery times and future output will be assessed
for changes in the severity of supply issues and business
confidence.
North America: Canada inflation, US home
sales
Canada's March inflation data will be in focus in the coming
week following record high PMI input cost indications from the
latest manufacturing survey. Besides the flash PMI data, US also
releases home sales and housing start figures.
Europe: Eurozone inflation, industrial production and
consumer confidence data, UK retail sales
Final inflation figures, industrial production and flash
consumer confidence data will be due from the eurozone while UK
updates retail sales data. Consumer trends are likely to have
worsened in the face of decade-high inflation readings in the
eurozone and UK.
Asia-Pacific: China Q1 GDP, retail sales and industrial
production data, Bank Indonesia meeting
The first quarter GDP reading will be due from China after
annual growth slowed to 4.0% in Q4 2021. On the back of the
country's struggle with outbreaks of the more infectious COVID-19
Omicron variant and the Russia-Ukraine war that broke out in Q1,
growth risks have risen. Other data, including retail sales and
industrial production, are also of interest for a sense of the
degree to which the latest movement restrictions have affected
output, particularly after the
Caixin China General Composite PMI showed business activity
falling at the fastest pace since February 2020. Separately, Bank
Indonesia updates monetary policy next week with no changes to
rates expected until H2 2022.
Special reports:
Inflation Outlook Worsens as PMI Data Show Steepest Rise in
Global Business Costs Since 2008 - Chris Williamson
Economic Impact of Russia-Ukraine War on the Asia-Pacific Region
- Rajiv Biswas
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.
