The following is an excerpt from the latest Week Ahead Economic Preview from S&P Global Market Intelligence. For the full report, please click the Download Full Report link.
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A plethora of economic data is due out over the coming week, with S&P Global Worldwide Manufacturing PMIs set to dominate the headlines and the week ending with US nonfarm payrolls. Additionally, second quarter GDP updates for India, South Korea, Italy, Canada, Poland and the Czech Republic will be monitored for signs of a slowdown as the global economy continues to face the downside of high inflation, growing uncertainty and rising interest rates. Industrial production data for Thailand, Japan and Brazil will be released, along with a plethora of inflation data, which are expected to confirm the persistence of high inflationary pressures.
Market volatility has been compounded in recent weeks by rate hikes, energy market concerns and geopolitical tensions. As such, PMI data to be released towards the end of the week will be followed with particular interest and will provide further updates on how economies are faring amid mounting recession fears. Flash data last week pointed to a more affected manufacturing sector, where inflation rates and the impact of supply disruptions continue. Flash data pointed to outright declines in the US, euro-zone and Japan, and additional color to the global manufacturing outlook is expected from manufacturing PMIs, particularly for mainland China.
Markets are also eagerly awaiting US nonfarm payrolls data, particularly as a key indicator of recession risk. While last month’s data beat forecasts, markets are expecting a sharp slowdown in nonfarm wage growth this week, with August reading expected to come in at 290k (July: 528k).
The second quarter GDP updates offer a clearer look in the rear-view mirror, with markets set to keep a particularly close eye on growth trends in Canada, South Korea, India and Italy. Growth is expected across the board, with a slowdown in the pace of expansion being expected in Italy in particular.
Elsewhere, inflation data is flowing thick and fast, with euro-zone flash numbers arguably the most significant. Inflation is likely to have remained high in August at 8.9% in July. Inflation numbers for South Korea will also be released and, like the eurozone, rates are likely to be high.
Global PMIs to guide industrial growth, supply chains and pricing pressures
Global manufacturing PMIs are due out next week, with the data following some disappointing flash PMI numbers. Looking at the four largest developed economies of the US, the Eurozone, Japan and the UK (the “G4”), preliminary flash PMI data shows manufacturing contracted at a rate that – barring the initial pandemic lockdowns – is – was the steepest since the 2009 global financial crisis. Output in both manufacturing and services contracted for the second straight month, with rates of decline accelerating.
However, the polls brought some preliminary good news on the inflation front. Supply shortages, which have been a major cause of rising prices during the pandemic, showed signs of easing in August, with the number of supplier delays in the G4 economies falling to the lowest since October 2020. Industrial goods fell at one of the sharpest rates in recent years ten years. This combination of falling demand-pull and supply-push inflation factors caused industrial goods price inflation to cool sharply to an 18-month low.
Full global release of PMIs will allow us to continue to monitor these demand, supply and price developments, with the inclusion of data for mainland China and developing APAC economies providing particularly important new detail.
Important diary events
Monday 29 August
Market holiday in the UK
Australia Retail Sales (July)
Japan Coincident Index Final (June), Unemployment Rate (July)
Ireland Retail Sales (July)
Tuesday, August 30th
Thailand Industrial Production (July)
Germany import prices (Jul), inflation (Aug)
Czech Republic GDP (Q2)
Spain Inflation Rate (Aug), Business Confidence (Aug)
Switzerland KOF leading indicators (Aug)
UK Mortgage Approvals (July)
Eurozone consumer confidence finals (August)
US House Price Index (June),
US Conference Board Consumer Confidence (August)
Wednesday 31 August
Industrial Production in South Korea (July)
Japanese Industrial Production (July)
China NBS Manufacturing PMI (August)
France Inflation Rate (August)
Germany Unemployment Rate (August)
Poland GDP growth rate (Q2)
Hong Kong Retail Sales (July)
Eurozone core inflation rate (August)
Italy Inflation Rate (August)
MBA Mortgage Applications in the United States (26 August),
ADP employment turnover in the United States (June)
GDP India (Q2)
GDP Canada (Q2)
Russia Unemployment Rate (Jul), GDP (Jul)
Thursday, September 1st
S&P Purchasing Managers’ Indices for global manufacturing*
South Korea’s GDP Growth Rate (Q2), Exports (August)
Investments in Japan (Q2)
Home loans in Australia (July)
Indonesia Inflation Rate (August)
Retail Sales Germany (July)
UK Countrywide House Prices (August)
Italy GDP Growth Rate (Q2), Unemployment Rate (July)
Eurozone Unemployment Rate (July)
Brazil GDP (Q2), Trade Balance (August)
United States Unemployment Claims (August)
Friday, September 2nd
South Korea Inflation (August)
Trade balance Germany (July)
Change in unemployment in Spain (August)
Brazilian Industrial Production (July)
Trade Balance India (July)
US Nonfarm Payables (August) Unemployment Rate (Aug), Factory Orders (Jul)
* Find press releases on indices from S&P Global and relevant sponsors here here.
** Includes composite PMI
Something to see
PMIs for global manufacturing
Following last week’s flash data – which showed a slowdown in private sector activity in Australia, Japan, France, Germany and the US, and a slowdown in the UK – global manufacturing data will provide further information on performance amid rising economic uncertainty and falling demand disclose , the global energy crisis and increased price pressure. Manufacturers have been hit particularly hard by recent developments as concerns over rising inventories have the potential to exacerbate a fall in final demand.
Americas: US nonfarm payrolls, factory orders and Canada Q2 GDP
In the US, the highlight of the week is the monthly jobs report. July data showed a stronger-than-projected increase in US nonfarm payrolls, but job growth is expected to fall sharply from 528k in July to 290k in August. US Factory Orders will be released shortly thereafter, adding color to July manufacturing developments after worse-than-expected Durable Goods Orders (which were flat and below consensus +0.5%). Also watch out for the Conference Board’s consumer confidence data and home price data, both of which aim to assess the impact of rising interest rates.
Elsewhere in the region, Canada sees a Q2 GDP update that should signal growth.
Europe: Eurozone CPI, Italy and Poland Q2 GDP, Germany Inflation Retail Sales and Unemployment
Many major economic releases are scheduled for Europe this week, with Italy, Poland and the Czech Republic all releasing Q2 GDP numbers. Moderate growth is expected in all three, although forecasters in the Czech Republic only expect expansion of 0.2%.
Inflation, retail sales and trade data for Europe’s largest economy – Germany – will shed further light on economic performance. Recent data has shown that inflation and unemployment rates are rising while retail sales have fallen sharply. The Eurozone also sees important updates on inflation and unemployment rates.
Asia Pacific: India and South Korea Q2 GDP, Japanese Industrial Production and Indonesian Inflation
India and South Korea Q2 GDP updates will be the focus this week. Inflation data will also shed light on the price front in South Korea, where inflation numbers have remained elevated. Indonesia also sees published inflation numbers.
In Japan, unemployment figures, industrial production and consumer confidence data will be released.
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Purchasing Managers’ Index™ (PMI™) data is compiled by IHS Markit for more than 40 economies worldwide. The monthly data comes from surveys of executives in private sector companies and is available by subscription only. The PMI dataset includes a headline number that indicates the overall health of an economy and sub-indices that provide insights into other key economic factors such as GDP, inflation, exports, capacity utilization, employment and inventories. PMI data is used by financial and business professionals to better understand where economies and markets are headed and to uncover opportunities.
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, a separately managed division of S&P Global.