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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.
US, China inflation, UK GDP and ECB meeting in focus
The Ukraine crisis induced uncertainty remains in focus going
into the fresh week, though the attention is expected to be shared
with upcoming inflation data releases across US and China. The
European Central Bank's March meeting will likewise be closely
watched. Meanwhile the UK releases January output numbers and China
updates trade figures for February.
The European Central Bank's monetary policy meeting will be
closely followed in the coming week amid recent developments on the
Ukraine front. This week saw Fed chair Jerome Powell's reiterating
the Fed's commitment towards upcoming interest rate hikes in his
first day testimony to the US Congress, though uncertainty from the
Ukraine war had been acknowledged as expected. While the ECB may
continue moving forward with plans to update their forward guidance
in the March meeting to reflect their intent to hasten tightening
of monetary policy, European central bankers may likewise exercise
caution given the proximity to the Ukraine impact.
Meanwhile inflation concerns continue to reign chieftain for
markets particularly with the Ukraine crisis further adding
pressure. Investors will be able to glean insights into the
pre-invasion inflation picture from the data releases across US and
China in the coming week. As it is, global manufacturing production
had revived from the December low though supply shortages and
inflationary pressures continued to constrain growth, a phenomenon
that may be exacerbated by the ongoing surge in commodity prices,
such as with energy costs.
Other economic data to track in the coming week includes China's
trade data, with exports growth expected to have moderated. UK's
January output data will also be watched after COVID-19 cases
started ebbing in the month.
Global economy reviving from Omicron wave prior to Ukraine
war
Russia's invasion of Ukraine has dominated the news flow and
markets, the latter focusing on the economic impact of the war. The
conflict came just as the global economy was showing signs of
having ridden through the Omicron wave relatively unscathed by
comparison with prior COVID-19 waves. The JPMorgan Global PMI
recovered from a one-and-a-half year low of 51.1 in January to 53.4
in February, with service sector growth in particular rebounding as
virus related restrictions were relaxed around the world.
Although still acting as constraints on output, supply chain
shortages showed signs of easing. The peaking of the Omicron wave
is also likely to help alleviate some of the widespread staffing
difficulties reported by firms across the globe in the first two
months of the year. Business confidence about prospects for the
year ahead surged to an eight-year high.
That, however, was before Russia's invasion of Ukraine. As
the humanitarian consequences are both unfathomable and tragic,
some of the initial economic implications are likely to be more
clear-cut. GDP growth forecasts are being revised lower, especially
in Europe, and inflation forecasts are being revised higher, though
there remains great uncertainty as to the scale of the impact.
Before fresh data are released to reveal the initial economic
impact in March and beyond, it will therefore be the war and the
words of policymakers, forecasters and the politicians which will
be watched for market guidance, the backward-looking economic
indicators taking a back seat.
Key diary events
Monday 7 Mar
New Zealand Reserve Assets Total (Feb)
China (Mainland) Trade (Feb)
Switzerland Unemployment Rate (Feb)
Germany Industrial Orders (Jan)
Germany Retail Sales (Jan)
United Kingdom Halifax House Prices (Feb)
Norway Manufacturing Output (Jan)
Eurozone Sentix Index (Mar)
Tuesday 8 Mar
Japan Current Account (Jan)
Germany Industrial Output (Jan)
Norway GDP (Jan)
Taiwan CPI (Feb)
Taiwan Trade (Feb)
Eurozone GDP (Q4, revised)
United States International Trade (Jan)
Canada Trade Balance (Jan)
United States Wholesale Inventories (Jan)
Wednesday 9 Mar
South Korea Market Holiday
South Korea Presidential Election
Japan GDP (Q4, revised)
China (Mainland) CPI, PPI (Feb)
United States JOLTS Job Openings (Jan)
Thursday 10 Mar
Japan Corp Goods Price (Feb)
United Kingdom RICS Housing Survey (Feb)
United Kingdom Goods Trade Balance (Jan)
Norway Consumer Price Index (Feb)
Eurozone ECB Deposit and Refinancing Rate (Mar)
United States CPI (Feb)
United States Initial Jobless Claims
China (Mainland) M2, New Yuan Loans, Loan Growth (Feb)
Friday 11 Mar
New Zealand Manufacturing PMI (Feb)
Japan All Household Spending (Jan)
Malaysia Industrial Output (Jan)
Germany CPI (Feb, final)
United Kingdom monthly GDP, incl. Manufacturing, Services and
Construction Output (Jan)
India Industrial Output (Jan)
Canada Capacity Utilization (Q4)
Canada Employment Change and Unemployment Rate (Feb)
United States UoM Sentiment (Mar, prelim)
What to watch
North America: US CPI, UoM sentiment
US releases February CPI figures on Thursday with the consensus
pointing to an acceleration of consumer price inflation to 0.7%
month-on-month from 0.6% previously. On a year-on-year basis, a
materialisation of the 7.8% forecast will make it the highest
reading since January 1982. Core CPI is likewise expected to tick
up. According to the
IHS Markit US Composite PMI, output prices rose at a faster
rate in February, supporting the expectation for a steeper CPI
reading.
Preliminary March University of Michigan sentiment index
readings will also be updated on Friday. Early data from latest PMI
surveys showed sentiment improving amongst private sector
firms.
Europe: ECB meeting, UK January output, eurozone Q4 GDP
and German inflation
The European Central Bank will meet in the coming week with no
change to policy rates expected. After signalling their intent to
hasten the end to net asset purchases and an earlier start to
policy rate rises in February, changes to the ECB's forward
guidance should not be ruled out in the March meeting. That said,
given recent developments, particularly the Ukraine crisis, the ECB
may err on the cautious side.
UK January output data will be due on Friday. According to IHS
Markit / CIPS UK Composite PMI data for January, UK private sector
growth accelerated slightly after growing at the slowest rate in 10
months in December. Manufacturing sector growth outpaced that of
services at the start of 2022.
Asia-Pacific: China trade and inflation data, Japan Q4
GDP, Taiwan CPI
China's trade and inflation data will be released on Monday and
Wednesday respectively. Both import and export expansions are
expected to have slowed in the month of February according to
consensus, though remaining at double digit percentage growth.
On inflation, February's Caixin China PMI data indicated that
manufacturing input costs rose at an accelerated pace, hinting at
steep PPI readings while CPI may trend otherwise amid easing
services selling price inflation.
Special reports:
Global Manufacturing Growth Revives From 1½ Year Low, but Supply
Shortages and Inflationary Pressures Persist - Chris Williamson
Vietnam: Exports Drive Economic Rebound in Early 2022 - 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.
