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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.
February flash PMIs, RBNZ, BoK meetings, GDP readings
IHS Markit flash PMIs for February, released across major
developed economies, will be in focus in the coming week. Central
bank meetings in New Zealand and South Korea will also unfold,
while a series of GDP updates for the US, Germany, Taiwan and
Thailand are anticipated. Consumer confidence across the US and
eurozone will also be updated.
The global market had been caught between the crosswinds of
geopolitics risks and inflation concerns in the past week, with the
latter accompanied by increasingly hawkish central bank
expectations. Flash PMIs will be unveiled for February in the
coming week across major developed economies for a check on the
Omicron variant's disruptions towards economic conditions and, more
crucially, the supply chain and inflation situation. This comes
amid reinforcements of an anticipated March FOMC rate hike based on
recent Fed comments, though uncertainty continues to surround the
likelihood of a more aggressive 50 basis points hike at the next
meeting.
Meanwhile after the Bank of England hiked interest rates to
tackle inflation and amid
tight labour market conditions, across the globe in New
Zealand, the RBNZ is expected to raise interest rates again after
the labour market continued its record trend into Q4. The Bank of
Korea is, however, expected to stay put.
While tighter virus containment measures contributed to the
weaker PMI growth picture in January, companies also reported
output to have been constrained by staff shortages to an extent
exceeded only by that seen during the first wave of the pandemic in
early-2020. Labour shortages were exacerbated in January by staff
illness and absenteeism due to self-isolation rules.
More encouragingly, the incidence of output being
constrained by materials shortages continued to fall from a
pandemic-peak recorded last October. However, the concern -
illustrated by our chart below - is that output constraints due to
staff shortages have been followed by periods of worsening
materials shortages, reflecting the lagged impact from the lost
production of inputs and other raw materials arising from the
labour shortages.
Some of the important trends to watch in the flash PMI
numbers will therefore be the extent to which both manufacturing
output and supplier delivery times have been affected by the
Omicron wave, and the extent to which this has fed through to
producer input and output prices. However, the data will also be
watched for signs that the worst of the Omicron impact on consumer
services may be over, at least in the US and Europe, which should
help offset any supply chain damage to growth. That said, any
combination of recovering demand and supply constraints bodes ill
for inflation. Meanwhile also keep an eye on the future output
expectations indices, as this is where any geopolitical concerns
emanating from Ukraine will be most visible.
Key diary events
Monday 21 Feb
US, Canada Market Holiday
Australia IHS Markit Flash PMI, Manufacturing & Services*
Japan au Jibun Bank Flash Manufacturing PMI*
UK CIPS/IHS Markit Flash PMI, Manufacturing & Services*
Germany IHS Markit Flash PMI, Manufacturing & Services*
France IHS Markit Flash PMI, Manufacturing & Services*
Eurozone IHS Markit Flash PMI, Manufacturing & Services*
New Zealand Trade Balance (Jan)
Thailand GDP Growth (Q4)
Philippines Core CPI (Jan)
Germany Producer Prices (Jan)
Taiwan Export Orders (Jan)
Tuesday 22 Feb
US IHS Markit Flash PMI, Manufacturing & Services*
Germany Ifo Business Climate New (Feb)
United States Consumer Confidence (Feb)
Wednesday 23 Feb
Japan Market Holiday
Australia Wage Price Index (Q4)
New Zealand Cash Rate (23 Feb)
Thailand Customs-Based Trade Data (Jan)
Thailand Manufacturing Production (Jan)
Singapore Consumer Price Index (Jan)
Germany GfK Consumer Sentiment (Mar)
Taiwan Industrial Output (Jan)
Eurozone HICP (Jan, final)
Thursday 24 Feb
South Korea Bank of Korea Base Rate (Feb)
Taiwan GDP (Q4, revised)
United States GDP (Q4, 2nd estimate)
United States Initial Jobless Claims
United States New Home Sales (Jan)
Friday 25 Feb
Philippines Market Holiday
New Zealand Retail Sales (Q4)
United Kingdom GfK Consumer Confidence (Feb)
Singapore Manufacturing Output (Jan)
Germany GDP Detailed (Q4)
Germany Import Prices (Jan)
Eurozone Business Climate (Feb)
Eurozone Consumer Confidence (Feb, final)
United States Personal Income and Consumption (Jan)
United States Core PCE Price Index (Jan)
United States Durable Goods (Jan)
United States UoM Sentiment (Feb, final)
*Press releases of indices produced by IHS Markit and
relevant sponsors can be found
here.
What to watch
February IHS Markit flash PMIs
February's flash PMIs will be released across the US, UK,
eurozone and APAC economies including Japan and Australia.
January's figures told
of slowing growth and persistent price pressures for the global
economy. Amid the varying trajectory of the COVID-19 Omicron
variant's spread across the different developed countries,
February's PMI readings will keenly watched. Specifically, consumer
services' performance will be observed after having been hard hit
by the deterioration in COVID-19 conditions brought about by the
spread of the more infectious variant. The trends with price
pressures attributed to disruptions towards materials and staff
will also be in focus, particularly given the focus on monetary
policy tightening.
North America: US Q4 GDP (2nd estimate), consumer
confidence, core PCE readings
A holiday-shortened week ahead for the US finds the release of
the second Q4 GDP estimate, January core PCE and February consumer
confidence data. While a slight upward revision for Q4 GDP is
expected, the attention may well be on the January core PCE reading
following a 40-year high CPI update. February consumer confidence
is meanwhile expected to soften, according to consensus. Also watch
out for US durable goods orders and new homes sales.
Europe: Eurozone HICP, consumer confidence, German Q4
GDP, Ifo business climate
Final January HICP is expected out of the eurozone alongside
February consumer confidence data. Meanwhile Germany releases
detailed Q4 GDP data, producer price numbers and February's Ifo
business climate readings.
Asia-Pacific: RBNZ, BoK
meetings, Taiwan and Thailand Q4
GDP
The Reserve Bank of New Zealand and Bank of Korea meet in the
coming week with the RBNZ expected to hike another 25 basis points
amid a tightening labour market situation.
Special reports:
UK Wages Rise Amid Tightest Labour Market for Decades, but
Surveys Hint at Pay Pressures Peaking Soon - Chris Williamson
South Korean Economy Boosted by Strong Exports - 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.
