ECONOMICS COMMENTARY — Mar 22, 2024
Week Ahead Economic Preview: Week of 25 March 2024
By Chris Williamson and Jingyi Pan
The following is an extract from S&P Global Market Intelligence's latest Week Ahead Economic Preview. For the full report, please click on the 'Download Full Report' link.
US core PCE, final Q4 GDP readings and China NBS PMI
Following the past week's central bank meetings, the attention turns to economic releases in the week ahead with US core PCE, personal income and spending figures among noteworthy key data releases. This is in addition to inflation readings for France and Spain and final Q4 GDP readings from the US and UK. Besides which, the Bank of Japan's post-meeting summary will also be watched alongside Japanese retail sales and industrial production numbers.
February's US core PCE prices data will be due at the end of the week with the consensus pointing to a lower reading from January. That said, any surprises on the upside may well be overlooked by the market after the Fed reiterated their intent to lower rates by 25 basis points three times in 2024 at the March Federal Open Market Committee (FOMC) meeting. This was despite higher-than-expected inflation readings of late. Flash PMI readings for March also revealed that inflationary pressures have gathered pace again in US, now hinting at stubbornly above-target inflation mid-2024.
Meanwhile in Japan, the au Jibun Bank Flash Japan PMI revealed that business activity grew at a quicker pace in March though cost pressures also intensified. The rise in PMI input price inflation, which preludes the trend for CPI, nevertheless suggests that price pressures are still expected to be subdued in the coming months and are supportive of market expectations for the BoJ to stay put after exiting the negative interest rate regime. The summary of opinions from the March meeting will therefore be keenly watched.
In Europe, the Bank of England adopted a more dovish stance than expected as two of the Monetary Policy Committee members withdrew their prior votes to hike rates. However, as with the Fed, the Bank of England remains data dependent, though the week merely sees updated fourth quarter GDP. The European Central Bank, seemingly keen to cut rates in June, will meanwhile be fed fresh inflation numbers for Spain and Italy, as well as consumer and business confidence surveys.
Finally, mainland China's NBS PMI figures will be due over the weekend ahead of worldwide manufacturing and services PMI releases in the following week. Consensus expectations at the time of writing suggest that the market is anticipating improvements in March.
Central banks: wait and see
The latest policy meetings at the US FOMC, Bank of England and ECB have been characterised by a guarded optimism that interest rates will start to fall in 2024, the questions focused on 'when' not 'if' it might be appropriate to start loosening monetary policy. The flash PMI data released for March support the view that there is no need to rush.
In the first instance, recession worries continued to be quashed by the flash PMIs. The US and UK flash PMIs signalled solid ends to the first quarter, and the eurozone PMI came close to stabilising, hinting at an imminent end to the region's recession. In fact, output growth measured across the world's four largest economies, the US, eurozone, Japan and UK, accelerated in March to its fastest since last June. There therefore appears to be no need to loosen policy to stave off recession.
Second, price pressures - both in terms of input costs and selling prices across goods and services - remained elevated by pre-pandemic standards across the board, and even intensified in the US. Stubborn inflation was often linked to upward wage pressures amid tight labour markets, exacerbated by recent energy price hikes.
In short, the survey data suggest that the US and European central banks have time to monitor the data follow over the spring to assess the inflation trend, with the expectation that lower headline inflation readings will eventually erode wage bargaining power.
Key diary events
Monday 25 Mar
India Market Holiday
Japan BoJ Meeting Minutes (Jan)
Thailand Trade (Feb)
Malaysia Inflation (Feb)
Singapore Inflation (Feb)
Taiwan Industrial Production (Feb)
United States New Home Sales (Feb)
Tuesday 26 Mar
Australia Westpac Consumer Confidence (Mar)
Japan Consumer Confidence (Mar)
Singapore Industrial Production (Feb)
Germany GfK Consumer Confidence (Apr)
Spain GDP (Q4, final)
Hong Kong SAR Trade (Feb)
United States Durable Goods Orders (Feb)
United States S&P/Case-Shiller Home Price (Jan)
United States CB Consumer Confidence (Mar)
Wednesday 27 Mar
South Korea Business Confidence (Mar)
China (Mainland) Industrial Profits (Feb)
Spain Inflation (Mar, prelim)
France Consumer Confidence (Mar)
Eurozone Economic Sentiment (Mar)
Mexico Trade (Feb)
Spain Business Confidence (Mar)
South Africa SARB Interest Rate Decision
Thursday 28 Mar
Japan BoJ Summary of Opinions (Mar)
Australia Retail Sales (Feb, prelim)
United Kingdom GDP (Q4, final)
Germany Retail Sales (Feb)
Germany Unemployment Rate (Mar)
Italy Business Confidence (Mar)
Brazil Unemployment Rate (Feb)
India Current Account (Q4)
Canada GDP (Jan)
United States GDP (Q4, final)
United States UoM Sentiment (Mar, final)
United States Pending Home Sales (Feb)
Friday 29 Mar
US, UK, Eurozone, Switzerland, Norway, Australia, Singapore, Hong Kong SAR, South Africa, India, Brazil, Canada, New Zealand Market Holiday
South Korea Industrial Production (Feb)
Japan Unemployment Rate (Feb)
Japan Industrial Production (Feb)
Japan Retail Sales (Feb)
France Inflation (Mar, prelim)
Italy Inflation (Mar, prelim)
United States Core PCE (Feb)
United States Personal Income and Spending (Feb)
United States Wholesale Inventories (Feb, adv)
Sunday 31 Mar
China (Mainland) NBS PMI (Mar)
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What to watch in the coming week
Americas: US core PCE, Q4 GDP, personal income and spending, durable goods orders and home sales data
Following the Fed's March meeting, the focus shifts to a slew of data releases including the final Q4 GDP release, monthly core PCE, home prices and durable goods orders.
The March Fed meeting underscored the Fed's commitment to lower interest rates in 2024 though remaining data dependent. As such, the Fed's preferred gauge of inflation, core PCE, will be a highlight in the coming week. Consensus expectations indicate a softer reading in February, supportive of the Fed lowering rates in the coming months.
Additionally, monthly activity data will be closely watched including personal income and spending figures for insights into consumer activity. Durable goods orders will also shed light on business investment trends, especially after manufacturing sector conditions were shown to have improved at the fastest pace since July 2022 according to the S&P Global US Manufacturing PMI.
EMEA: Eurozone economic sentiment, UK final Q4 GDP, Germany GfK consumer confidence, France, Italy CPI
A series of economic releases out of the eurozone will be watched post the flash PMI releases. These include consumer and business sentiment data across the eurozone. The UK also updates final Q4 GDP while preliminary March inflation readings out of France and Italy will give an early sense of price trends in the eurozone.
APAC: China NBS PMI, industrial profits, Japan industrial production and retail sales, Australia retail sales, Singapore and Malaysia CPI
Ahead of worldwide manufacturing and services PMI releases at the start of April, key releases out of APAC include Japanese industrial production and retail sales figures, inflation figures from Singapore and Malaysia and retail sales data for Australia. Mainland China's National Bureau of Statistics also update manufacturing and non-manufacturing PMI figures over the weekend.
Meeting minutes from the January Bank of Japan meeting, and the summary of opinions from the latest March meeting, will also be due in the week.
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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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