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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.
March flash PMIs, UK inflation, Fed comments in focus
March flash PMIs will be released in the coming week for a first
look at economic conditions since the outbreak of the Ukraine war.
A series of Fed speakers will also be watched post the Fed FOMC
meeting with central bank meetings also scheduled in Switzerland,
Norway and the Philippines. UK, Singapore and Malaysia inflation
figures are meanwhile updated for February but also watch out for
US durable goods orders, US, UK and eurozone consumer sentiment, US
fourth quarter GDP revisions and production data out of Taiwan and
Thailand.
Soaring inflation rates have seen the US Fed raise interest
rates for the first time since 2018 and the Bank of England hike
for a third successive meeting, with higher inflationary pressure
expected amid persistent elevated prices across energy and broader
commodity markets (see box). A greater uncertainty will be the
resilience of economic growth against the headwinds of these higher
borrowing costs, a widespread cost of living crisis, geopolitical
stress from the invasion of Ukraine, China's latest COVID-19
shutdowns, financial market volatility and the withdrawal of
pandemic fiscal stimulus.
The coming week will provide some clues as to how robust
business and consumers are coping in the face of these headwinds.
Consumer sentiment data from the Eurozone, UK and US are widely
expected to see households struggling under the weight of soaring
energy bills, while business sentiment looks set to be hit by the
uncertainty caused by the Ukraine war and renewed concerns in
manufacturing over supply chains and costs. Less clear will be the
extent to which downward risks to output across manufacturing and
services have been offset by the reopening of economies from
COVID-19 restrictions. Policymakers will be hoping to see some
resilience here.
Commodity price spike
In addition to providing the first major glimpse into
economic growth, supply chains and business confidence following
the invasion of Ukraine, the coming week's flash PMI business
surveys will provide guidance on the extent to which inflationary
pressures are continuing to build, with particular concern relating
to the potential passthrough of higher energy and other commodity
prices through the value chain to consumers.
The invasion has seen commodity prices spike higher: the IHS
Markit
Materials Price Index (MPI) jumped another 5% in the second
week of March, following the record-breaking 8.1% increase the week
before. Commodity prices now sit 11.7% above the previous all-time
high set in April 2011.
Brent Crude oil reached $129 per barrel for the first time
since 2008 but prices for industrial metals also soared amid
trading volatility and concerns over future supply from Russia. The
MPI's ferrous sub-index jumped 10% and the nonferrous metal
sub-index increased 2% with unprecedented turbulence in the nickel
market leading to the suspension of trading in the nickel contract
on the London Metal Exchange (LME).
While the commodity price spike itself is a concern for the
inflation outlook, supply constraints arising from both the Ukraine
crisis and new lockdowns in China add further risks to persistent
elevated price pressures, while also choking economic growth (see
special report on page 4). S&P Global Mobility research already
sees the
production of 2.6 million vehicles at risk in 2022 due to the
war's impact on supply chains.
The PMI suppliers' delivery times index, and input costs and
selling prices gauges, will therefore provide key insights into the
developing inflation picture, both in manufacturing and the larger
services economy.
Key diary events
Monday 21 Mar Japan Market Holiday
New Zealand Trade (Feb)
China (Mainland) Loan Prime Rate 1Y, 5Y (Mar)
Hong Kong SAR CPI (Feb)
Germany Producer Prices (Feb)
Taiwan Export Orders (Feb)
United Kingdom CBI Distributive Trades (Mar)
Tuesday 22 Mar
Canada Producer Prices (Feb)
Wednesday 23 Mar
South Korea PPI (Feb)
Thailand Customs-Based Trade Data (Feb)
Thailand Manufacturing Production (Feb)
Singapore Consumer Price Index (Feb)
United Kingdom Inflation (Feb)
Taiwan Industrial Output (Feb)
United States New Home Sales (Feb)
Eurozone Consumer Confidence (Mar, flash)
Thursday 24 Mar
Japan BoJ Meeting Minutes (Jan)
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*
Philippines Policy Int Rate (24 Mar)
Taiwan Jobless Rate (Feb)
Switzerland SNB Policy Rate (Q1)
Norway Norges Bank Key Policy Rate (24 Mar)
United States Durable Goods (Feb)
United States GDP (Q4, final)
United States Initial Jobless Claims
Friday 25 Mar
United Kingdom GfK Consumer Confidence (Mar)
Singapore Manufacturing Output (Feb)
Malaysia CPI (Feb)
United Kingdom Retail Sales (Feb)
Germany Ifo Business Climate New (Mar)
United States University of Michigan Sentiment (Mar, final)
United States Pending Sales Change (Feb)
What to watch
March flash PMIs across developed economies
March flash PMIs will be released across the US, UK, eurozone
and the APAC economies of Japan and Australia in the coming
week.
February PMIs signalled a revival of growth economic growth as
the Omicron wave faded and business optimism also improved. Since
then, however, Russia's invasion of Ukraine has led to a steep rise
in commodity prices and further supply chain issues. Flash PMI
data, typically based on approximately 85%-90% of total PMI survey
responses each month, will shed light on conditions across demand,
output, prices and sentiment - with the severity to which these
indicators reflect the effect of the war being the key focus.
North America: US Q4 GDP final estimate, Fed member
appearances
Following the conclusion of the Fed FOMC meeting this week,
where the Fed exercised a 25 basis points hike to rates and
signalled the intention to commence shrinking its $8.4 trillion
bond portfolio, the series of Fed members' appearances in the
coming week will be in focus for further details into the Fed's
plans going forward. This will be important amid the uncertainties
brought about by recent developments including the Ukraine invasion
which is expected to weight on GDP growth in the first quarter.
Europe: UK inflation and retail sales data, eurozone
consumer confidence, Norges bank, SNB policy meetings
UK inflation data will be released in the coming week with
February
IHS Markit / CIPS UK Composite PMI preluding yet another likely
rise in consumer price inflation from its current 30-year high of
5.5%.
Asia-Pacific: BSP policy meeting, Singapore, Malaysia
CPI
Singapore and Malaysia inflation data will be due in the coming
week amid expectations for continued elevated price trends. No
change to Philippines' policy rate is meanwhile expected.
Special reports:
Flash PMI Preview: PMI Data to Provide Insights into Key
Economic Developments in March - Jingyi Pan
Hong Kong SAR Hit by Severe COVID-19 Wave - 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.
