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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.
Payrolls and PMIs dominate the economic agenda for the week
ahead, with the ECB's latest analysis and eurozone inflation also
in focus. Markets will be meanwhile watching for news of further
stimulus in the US in the form of additional infrastructure
spending.
The worldwide manufacturing surveys will be eyed for rising
inflationary pressures, with markets eager to assess whether recent
signs of rising prices will prove transitory - as policymakers are
expecting - or more troublesome. The surveys have brought welcome
signs of
factory output growth accelerating to the highest for nearly a
decade as economies have rebounded from virus-related
shutdowns. Especially strong growth has been seen in the Eurozone,
where flash PMI numbers for March showed a 23-year survey record
increase in production. But
the flash PMIs also brought further signs of production being
constrained - notably in the US - by escalating supply problems.
Supply shortages have in turn fed through the
highest price pressures since 2008.
March's data will therefore be scoured in particular for clues
as to whether supply is catching up with demand to alleviate some
of the bottlenecks, especially in relation to supplier delivery
times and shipping.
There will also be a big focus on the US, with non-farm payroll
data released on Friday. Prior data showed an unexpectedly strong
surge in employment as 379,000 new jobs were added in February and
prior months' data were revised up markedly. The unemployment rate
now stands at 6.2% compared to April's peak of 14.7%. With recent
robust survey data pointing to upbeat business confidence, buoyed
by the vaccine rollout and new $1.9 trillion stimulus measures,
hiring is likely to have remained solid in March.
Even more US stimulus looks to be on the cards, with President
Biden earmarked to announce at least $3 trillion of infrastructure
spending on Wednesday. Any news of additional stimulus could be
dampened, however, by countermeasures brought into pay for the
extra spending, especially tax hikes.
In Europe, a revamped monthly Bulletin is published by the ECB
in a week which sees preliminary inflation numbers issued for
March. February's annual CPI came is slightly below expectations at
0.9%, but recent survey data hint that upward pressures are
building.
In Asia, the NBS publishes its non-manufacturing PMI for
mainland China alongside its factory survey, while Japan updates
its retail sales, unemployment, industrial production and Tankan
survey statistics.
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.
