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Week Ahead Economic Preview: Week of 24 February 2020

21 February 2020 Bernard Aw Chris Williamson Joseph Hayes Ken Wattret Raj Badiani Sian Jones William May

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 'Download Full Report' link.

  • Coronavirus impact assessment from China PMI, plus Hong Kong SAR and India GDP updates
  • US economy health insights from regional Fed surveys and durable goods orders
  • Eurozone inflation estimate plus European sentiment surveys

The coming week sees the first major data release out of China since the coronavirus outbreak, with the February update of the government sponsored NBS manufacturing PMI. As with all manufacturing PMIs at times of supply shocks, we urge analysts to look at sub-indices relating to purchasing, output and new orders rather than the headline composite PMI index, as the latter is likely to be buoyed by longer delivery delays, giving a false reading of health.

Other key data releases out of Asia-Pacific include GDP data for Hong Kong SAR and India, plus a number of Asian trade and industrial output updates, notably for Japan. However, all will cover periods prior to the virus outbreak. Policy action will meanwhile come from the Bank of Korea while speeches by BoJ policy board members will be watched for clues of future policy moves.

The health of the US economy will be assessed from official data in durable goods orders as well as a clutch of regional Fed surveys, albeit with the focus somewhat limited to manufacturing. A fresh estimate of fourth quarter 2019 GDP will also be available, with expectations that the annualised growth will have remained unchanged at 2.1%. Inflation trends will also be eagerly assessed via the Fed's preferred gauge of PCE prices and Case-Shiller house prices are accompanied by home sales numbers to give an update on the housing market.

In Europe, the EC Commission sentiment surveys will give further insight into the Eurozone - and in particular Germany's - economic performance (the latter covered by Ifo) in February. German GDP data for the fourth quarter are also updated and will be eyed for signs of any potential (though unexpected) downward revision into contraction territory, though the detail will also be eagerly awaited for investment and consumption trends. ECB watchers will meanwhile be keen to see the flash official consumer price inflation numbers.

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PMI commentary: Chris Williamson

Europe commentary: Ken Wattret

APAC commentary: Rajiv Biswas and Bernard Aw

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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.

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