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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.
US, eurozone Q1 GDP data and China's manufacturing PMI
release
A string of Q1 GDP data will be released in the
coming week across the US, eurozone, South Korea
and Taiwan. The Caixin China General Manufacturing
PMI will also offer a first look into China's
manufacturing health amid the latest COVID-19 disruptions.
The flash eurozone inflation reading will
also be eagerly awaited while Australia and Singapore CPI figures
will likewise be released. The Bank of Japan meanwhile convenes and
updates their forecast figures.
As the equity markets continue to grapple with the implication
of higher inflation amid the string of Q1 earnings releases, we see
next week offering some return of the focus to fundamentals with a
series of tier-1 economic data updates. Specifically, both the US
and eurozone will release flash estimates for first quarter GDP, a
period that had seen easing COVID-19 restrictions and the Ukraine
war having had mixed effects upon growth. The extent of slowdown
from the fourth quarter of 2021 amid increasingly uncertain
conditions will be watched.
Flash inflation data from the eurozone will also be due in the
week following the S&P Global Flash Eurozone Composite PMI
release, which offers a first look into the price trends in April.
The inflation update comes as ECB policymakers are increasingly
worried about anchoring inflation expectations. Likewise in
Australia and Singapore, inflation numbers will be updated with
particular focus on the Australia Q1 CPI given recent remarks from
the Reserve Bank of Australia with regards to faster inflation and
the potential for quicker rate-rises.
In APAC, China's COVID-19 conditions remain severe and the April
China Manufacturing PMI will offer the earliest insights into
manufacturing sector conditions amid persistent stringent measures
to deal with the spread of the Omicron variant. The Bank of Japan
will be the sole central bank meeting held in this part of the
world. Although no changes are expected on the monetary policy
front, the central bank's projections will be closely
scrutinised.
European inflation on the rise as Ukraine war adds to price
pressures
After the latest flash PMI surveys showed elevated inflation
pressures persisting into April, the heat on policymakers at
European central banks has turned up. The survey data showed an
unprecedented rise in average prices charged for goods and services
across the eurozone, and the UK recorded the second-highest ever
rise, with April's jump only exceeded over the past two decades by
that seen in March. Existing pandemic related price pressures have
been exacerbated by the impact of the Ukraine war, most notably via
energy prices.
This week's official inflation update for the eurozone is
therefore likely to bring further bad news. The PMI data out of
China will also be eagerly assessed, as traders and policymakers
seek to gauge the likely impact of China's latest lockdowns on
trade and supply chain delays over the coming months, which could
add to global price pressures.
One potential source of easing price pressures could come from
oil. While the Russia-Ukraine war has put upward pressure on oil
and energy costs, it is possible that some alleviation of this
upward pressure could come from a slowing in the global
manufacturing economy. As our chart below shows, the oil price has
risen far more than is consistent with the current global
manufacturing expansion, with March's PMI data showing just
two-thirds of all economies covered by the PMIs to be reporting
rising output, down from over 80% at the end of last year. If this
weakness spreads further, prices for commodities such as oil may
only be deviating further from demand fundamentals.
Oil prices and the global manufacturing
expansion
Key diary events
Monday 25 Apr
Australia, New Zealand Market Holiday
Thailand Manufacturing Production (Mar)
Singapore CPI (Mar)
Germany Ifo Business Climate (Apr)
Taiwan Industrial Output (Mar)
Tuesday 26 Apr
South Korea GDP (Q1, advance)
Japan Unemployment Rate (Mar)
Singapore Manufacturing Output (Mar)
United States Durable Goods, New Home Sales (Mar)
United States Consumer Confidence (Apr)
Wednesday 27 Apr
Australia CPI (Q1)
Germany GfK Consumer Sentiment (May)
United States Pending Sales Change (Mar)
Thursday 28 Apr
New Zealand Trade Balance (Mar)
Japan Industrial Output, Retail Sales (Mar)
Australia Export and Import Prices (Q1)
Taiwan GDP (Q1, prelim)
Eurozone Business Climate, Consumer Confidence (Apr)
Germany CPI (Apr, prelim)
United States GDP Advance (Q1)
United States Initial Jobless Claims
Japan JP BOJ Rate Decision (28 Apr)
Friday 29 Apr
Japan, Indonesia Market Holiday
South Korea Industrial Output (Mar)
Australia PPI (Q1)
Germany Import Prices (Mar)
United Kingdom Nationwide House Price (Apr)
Switzerland Retail Sales (Mar)
Germany GDP (Q1, flash)
Thailand Current Account (Mar)
Norway Unemployment (Apr)
United Kingdom Mortgage Lending and Approvals (Mar)
Eurozone HICP (Apr, flash)
Eurozone GDP Flash Prelim (Q1)
United States Personal Income and Consumption (Mar)
United States Core PCE Price Index (Mar)
Canada GDP (Feb)
United States UoM Sentiment (Apr, final)
Saturday 30 Apr
China (Mainland) NBS Manufacturing PMI (Apr)
China (Mainland) Caixin Manufacturing PMI* (Apr)
* Press releases of indices produced by S&P Global and
relevant sponsors
can be found here.
What to watch
North America: US Q1 GDP, personal income and
consumption, Canada February GDP
The first estimate of US Q1 GDP will be released next week with
the consensus pointing to 1.0% growth for the first three months of
2022. That said, our US economics team is expecting a
below-consensus print. Recent data pointed to a weaker performance
in the months immediately preceding the Russian invasion of
Ukraine, leading to expectations for a sharp a slowdown of GDP
growth from the strong 6.9% annualised pace registered previously.
March personal income and consumption data will also be released,
as well as durable goods orders, consumer confidence and new home
sales.
Canada's February GDP will also be due with recent manufacturing
PMI data having indicated that operating conditions strengthened on
the back of solid output growth.
Eurozone Q1 GDP will also be updated in the coming week
alongside Germany's flash Q1 GDP figures. First quarter growth
performance will be closely watched given the spill over effects
from the Russia-Ukraine conflict. March PMI data showed that, while
growth persisted, overall growth momentum fell as business
sentiment slumped alongside rising prices on the back of the
Ukraine war.
Perhaps more importantly for monetary policy, flash April
inflation figures from the eurozone will be released on Friday.
Asia-Pacific: China manufacturing PMI, BoJ meeting,
Australia, Singapore CPI, South Korea, Taiwan GDP
In APAC, China's manufacturing PMI will be due in the coming
week commencing with the Caixin Manufacturing PMI and NBS
Manufacturing PMI released over the weekend. March's
Caixin Manufacturing PMI slipped below the 50.0 neutral point
to show the steepest contraction since the initial months of the
pandemic. Whether the trend persists with continued Omicron impact
on mainland China will be key to watch with the upcoming
release.
The Bank of Japan (BoJ) convenes in the coming week though no
change to monetary policy is expected for the central bank that
remains committed to their ultra-loose monetary policy stance, even
as many of their developed economies' peers proceed to raise
rates.
Special reports
Eurozone Growth Accelerates as Reviving Services Demand
Offsets Near Stalling of Manufacturing, but Prices Rise at Record
Rate - Chris Williamson
APAC Electronics Sector Moderates as Global Headwinds
Hit - 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.
