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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.
Flash PMIs for the US, Eurozone, UK, Japan and Australia
COVID-19 policy response, including Bank of England Policy
meeting
With the global economy facing recession and markets showing
increased signs of stress, flash PMI surveys will be eagerly
watched for the extent of the economic impact of the COVID-19
outbreak in March. The March flash PMI data for the US, Eurozone,
UK, Japan and Australia follow worldwide PMI surveys which showed
the global economy contracting at the steepest rate since 2009 in
February as the coronavirus disrupted manufacturing supply chains
and hit service sectors such as travel, tourism, restaurants and
transport.
In the US, the IHS Markit PMIs will come on the heels of
February numbers which had indicated one of the toughest months for
business since the global financial crisis. Although recent weeks
have seen news of stimulus from both the Federal Reserve and the
government, including a slashing of rates to near zero, markets are
fearing even worse numbers to come with recession now forecast.
Regional Fed surveys and the University of Michigan consumer survey
will also be eagerly assessed for virus impact in March (page
3).
The Eurozone and UK PMIs had meanwhile shown surprising
resilience in February, but the spread of COVID-19 has since
widened markedly into Europe, meaning March flash surveys will
likely reflect widespread disruptions to business across the
region. The UK flash PMI comes out ahead of the Bank of England's
first scheduled Monetary Policy Committee meeting with new governor
Andrew Bailey at the helm, although two emergency meetings so far
in March have already taken the base rate to a new all-time low of
0.1% and instigated a new asset purchases programme, which
accompanies a new quantitative easing programme in the eurozone
(page 4).
In Asia, expectations of a weak set of PMI data for Japan would
cement fears of the economy already being in recession after the
contraction seen late last year due to the sales tax hike, while
Australia's PMI will be eyed for the impact of travel restrictions
on tourism in particular (page 5). Elsewhere, a focus is likely to
remain on the recent US dollar's rise, notably in emerging markets
with high dollar debt servicing burdens.
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.
