ECONOMICS COMMENTARY — Jan 18, 2021
Week Ahead Economic Preview: Week of 18 January 2021
By Chris Williamson, Ken Wattret, Paul Smith, Ph.D., Rajiv Biswas, and Sian Jones
- Flash PMI surveys
- ECB, BoJ, PBoC interest rate decisions
- China's fourth quarter GDP
A full calendar for the week ahead includes GDP data for China, flash PMIs for the four largest developed world economies plus a host of monetary policy meetings. The US presidential inauguration is also going to be keenly watched, while in Europe additional interest comes from the EU Leaders Summit, where the pandemic will be in full focus.
Monetary policy events include central bank meetings in Brazil, Canada, China, the Eurozone, Japan, Indonesia, Malaysia and Norway. All are seeking to assess the ongoing impact of the pandemic on both domestic and international economic conditions.
China has so far seen the strongest economic recovery, which is likely to be confirmed with the release of fourth quarter GDP data showing accelerating growth. The strength of the economic rebound is, however, putting pressure on the central bank to rein in its pandemic stimulus, with increasing numbers of analysts expecting a rate hike in the second half of the year. The PBoC's Loan Prime Rate setting will be eagerly watched for clues as to the policy trajectory.
Similarly, in Japan the central bank will have been pleased to see recent encouraging business survey data, and the flash PMIs are updated for January later in the week. But a tightening of COVID-19 restrictions means the focus will likely remain firmly on building the recovery.
In the US, concerns have likewise risen regarding record COVID-19 case numbers, but tensions have also built ahead of the presidential inauguration ceremony on 20th January. The January flash PMIs will therefore be eyed for the impact of the political unrest and virus on both manufacturing and services activity, as will the jobless data.
It's a similar situation in Europe, where rising virus cases have led to more aggressive lockdown measures in many countries, notably the UK and Germany. The UK is also showing signs of struggling from its fresh departure from the EU, with supply chains showing signs of stress. Flash PMIs for the Eurozone and UK will therefore be eagerly assessed for early insights into how the region's major economies have fared at the start of the New Year, with the surveys released hard on the heels of the ECB's first monetary policy meeting of 2021.
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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 S&P Global 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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