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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.
Second quarter GDP releases include updates for the US and
Eurozone
US policy in spotlight as FOMC meets
Key Asia trade and output releases accompanied by GDP for Hong
Kong, Taiwan and Japan, plus China PMI
Insights into the depth of COVID-19 related economic downturns
will be provided by second quarter GDP estimates for the US,
Eurozone, Hong Kong and Taiwan, while the impact on companies will
be revealed via earnings updates from no fewer than 833 firms.
Policy action comes from the FOMC.
GDP data revealing economic recessions on scales not seen in
post-war years are set to dominate the headlines. In the US, we are
expecting an annualised GDP decline of around 35% for the second
quarter (near double-digits in quarterly terms). While this should
be followed by a rate of expansion of approximately 18% in the
third quarter, renewed lockdowns pose a downside risk. Gauging the
shape of the recovery will therefore dominate the FOMC meeting,
from which markets will meanwhile be looking for more forward
guidance about what it would take to keep the interest rates close
to zero for an extended period (expected to be several years), and
the extent to which inflation may be allowed to overshoot its
target, or even whether yields on government securities might be
targeted (page 3).
In Europe, second quarter GDP releases for the Eurozone will
include national updates for Germany, France, Italy and Spain, all
of which are also set to show eye-watering quarterly declines of
roughly double-digit magnitude as COVID-19 lockdowns hit economic
activity. Eurozone inflation numbers are also released while in the
UK the main updates are for mortgage lending and consumer credit
(page 4).
In Asia Pacific, Hong Kong SAR and Taiwan GDP for the second
quarter are issued alongside a new estimate of first quarter growth
in Japan. More timely monthly data for industrial production and
trade are also updated for nations including South Korea, Thailand,
Vietnam as well as Japan, which will help gauge recovery momentum
as we head into the third quarter. The government-sponsored China
PMI is also released and will give important clues as to the
recovery path at the start of the third quarter (page 5).
Rajiv Biswas, Executive Director and Asia-Pacific Chief Economist and
Sian Jones, Economist, Economic Indices, IHS Markit
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.
