ECONOMICS COMMENTARY — May 07, 2021
Week Ahead Economic Preview: Week of 10 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.
- Q1 GDP releases from UK, Malaysia, Philippines
- US retail sales and industrial production data
- US, China April inflation updates
After April's global PMIs revealed the strongest growth in 11 years, official economic data releases will be of interest to track recovery momentum, as well as the potential feed-though of faster growth to inflation.
Consumer and producer price inflation updates for April will be released from the US and China, alongside retail sales and industrial output for the former. The GDP lookback meanwhile continues with first quarter releases from the UK, Malaysia, and the Philippines, as well as eurozone factory production numbers. A quiet policy week can be seen ahead, with central bank meetings noted only in the Philippines.
US retail sales and industrial production data
The health of the US economy comes into focus with the release of retail sales and industrial production numbers. Recent record highs for PMI surveys in the US have added to the encouraging picture of the world largest economy, with consumer spending in particular surging higher. As such, one can look to April's retail sales performance for confirmation of the continued month-on-month improvement. Over and above the easing of lockdown restrictions, the distribution of the pandemic relief cheques had likely also helped to boost retail sales performance in April. Preliminary May University of Michigan data will also be keenly watched for signs of improvements in consumer confidence in tandem with the elevated US PMI business expectations index.
Separately, industrial output due next week is expected to confirm the continued expansion of the US manufacturing sector. Consensus expectations based on Refinitiv's poll of economists indicated that industrial production growth is likely to have accelerated in April.
US and China inflation watch
Another key theme to watch is the development of inflationary pressures, especially after signs of record supply-led cost pressures. Last week saw the Fed's meeting offering reassurances of accommodative policies in the near- to medium-term. But this week's U-turn by US Treasury Secretary Janet Yellen has left many scratching their heads. Although Yellen stressed the Fed's independence, the comments nevertheless served as a reminder of the potential for higher inflation to prelude interest rates hikes. Consensus estimates point to price pressures continuing to build across the US and China, these CPI releases being key ones to watch for the extent of inflation spiking higher in April.
UK GDP and eurozone industry updates
The monthly GDP update from the UK will complete a full picture of economic growth in the first quarter. After clocking a return to growth in February, the recovery looks to have gained impressive strength. The flash PMI for April came close to an all-time high as the economy reopened and the UK vaccine roll-out injected confidence into both businesses and consumers. However, the official trade data will also be closely watched for signs of any Brexit impact on exports.
In the eurozone, the industrial production numbers for March will come under scrutiny after February's data disappointed, contrasting with record growth signalled by recent surveys.
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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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