Week Ahead Economic Preview: Week of 3 May 2021
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.
- US employment report anticipated to show further major step in job market recovery
- BOE interest rate decision just one of several central bank gatherings
- Worldwide PMI surveys
A busy economic release diary includes manufacturing and services PMIs around the globe, accompanied by a broad sweep of trade data, GDP updates for Hong Kong SAR and Indonesia and key official factory data in the US, Brazil, France and Germany. All of which builds up to Friday's US jobs report.
A flurry of central bank action meanwhile includes policy meetings in the UK, Australia, Thailand, Norway, Brazil, Malaysia, Turkey and the Czech Republic, as well as the minutes from the March BOJ gathering. All meetings are being closely watched after the Bank of Canada became the first to rein-in post-pandemic stimulus amid signs of gathering recovery progress and higher prices.
PMI surveys and US nonfarm payrolls
The worldwide PMI surveys will provide the first snapshot into global economic trends at the start of the second quarter, a period in which world GDP is expected to lift to a new high. Further COVID-19 waves remain a concern and a threat to the outlook, but recent surveys have highlighted how economic activity is showing greater resilience to the virus, led by the US, and how rising optimism about the outlook is fuelling spending and investment, as well as faster jobs growth.
Strong hiring is therefore again anticipated in Friday's US employment report, with the consensus for another bumper 925k gain to add to the 913k surge seen in March. The unemployment rate is also forecast to edge lower to 5.8% from 6.0%. However, although 14m jobs had been regained over the past year, the total payroll count in March remained some 8.4m lower than its pre-COVID peak, highlighting how the labour market recovery has much further to go.
Bank of England policy meeting
In Europe, the UK and Eurozone PMIs are accompanied by the Bank of England's Monetary Policy Committee meeting. The Bank upgraded its growth forecasts last month and will have been cheered further by recent strong flash PMI numbers coming close to all-time highs, but no change in policy is expected as policymakers have stressed they are in no rush to remove accommodation while the economy remains well below its pre-pandemic peak.
RBA meeting plus China PMI
In the Asia-Pacific, the Reserve Bank of Australia is expected to sit tight on their hands, still committed to supporting jobs growth and inflation despite recent strong economic data. Monetary policy meetings are also expected in Thailand and Malaysia with no changes expected.
Caixin PMIs will meanwhile provide an update on China's economic recovery, as will April trade numbers, for which an impressive reading is expected given the low base effect. First quarter GDP figures will also be released for Hong Kong SAR and Indonesia, which we expect to show the quarterly annualised rates of growth slowing to 2.1% and 1.0% respectively, though year-on-year performances should improve.
PMI commentary: Chris Williamson
Europe commentary: Ken Wattret
APAC commentary: Rajiv Biswas
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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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- UK flash manufacturing PMI masks deteriorating production trend
- UK Flash PMI signals economy lifted by service sector, but manufacturing falters and prices rise at record rate
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