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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.
A holiday-shortened week finds US and Japan inflation
data alongside US and UK updates to Q3
GDP. US and eurozone consumer confidence
data are also due.
The latest FOMC meeting saw the Fed pivot towards ending
additional monetary stimulus. In line with our updated forecast,
the Fed also signalled multiple rate hikes in 2022. The market had
responded positively to the news with a 'sell the news' reaction,
seeing the S&P 500 and tech-heavy Nasdaq Composite up 1.6% and
2.1% respectively on Wednesday, albeit following an earlier
sell-off caused by a record jump in US producer prices. Next week's
core PCE data and inflation numbers into the new year will
therefore be closely watched for alignment with the Fed's forecasts
for any potential deviation from the current telegraphed rate path.
The latest IHS Markit Flash US Composite PMI for December revealed
that price pressures persisted into the year end, with service
sector inflation at a record, though supply chain pressures eased,
hinting at lower goods inflation in coming months (see box).
Meanwhile G4 economies saw diverging trends with business
confidence in the latest set of flash PMI data, detailed in our
special report. The US notably saw optimism improve on the back of
beliefs that the economic impact from the Omicron variant will be
less severe than previous waves. Corresponding consumer confidence
levels will be tracked with both US and eurozone releasing their
data in the coming week. Meanwhile, we send all of our readers our
very best wishes for the holiday season and for 2022.
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.
