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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.
The week ahead sees the US earnings season in full swing with
over 1,300 companies reporting, plus there are also key worldwide
PMI and US job market data releases to watch, some Asian GDP
updates and central bank meetings in the UK and Brazil.
PMI surveys for April, covering manufacturing and services, are
published worldwide on the heels of flash PMI data which showed
steepening rates of economic collapse. Detailed sector PMI numbers
will also record the extent of the impact for different
industries.
With measures taken to contain the COVID-19 outbreak having
intensified in many countries during the month, notably in the US
and Europe, the economic impact appears to have been commensurately
greater. Manufacturing PMI data for China, already released up to
April, have meanwhile shown only a very modest recovery, suffering
a re-acceleration in the rate of export decline, hinting strongly
that the recovery could fade.
So far the service sectors have taken the hardest hit from
social distancing. With China having started removing some of the
restrictions earlier, markets will therefore be looking to the
Chinese service sector PMI data for indications of the extent of
potential rebounds. Elsewhere in Asia, while the PMIs will give
clues as to how economies have performed at the start of the second
quarter, first quarter GDP numbers will help assess COVID-19
impacts on Hong Kong SAR, Indonesia and the Philippines.
Brazil's interest rates look set to be cut to fresh record lows
next week as the country fights an economic crisis that has led to
its currency hitting an all-time low. Analysts will also be eager
to see Bank of England rate setters' reaction to news of the UK
economy contacting at an unprecedented rate in April.
The week rounds off with the US employment report.
Non-farm-payrolls are widely expected to have fallen sharply and
Fed chair Powell has warned that the unemployment rate could spike
into double digits. Worse will likely follow. US GDP has already
fallen at a 4.8% annualised in the first quarter and our GDP
tracker points to a 37% plunge in the second quarter. Brace
yourselves for some grim data.
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.
