ECONOMICS COMMENTARY — Mar 05, 2021
Week Ahead Economic Preview: Week of 8 March 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.
- Focus turns to policy meetings at ECB and Bank of Canada, plus BoE and RBA speeches, amid bond market turmoil
- US job markets and consumers in focus
- China trade data and Japanese GDP
Markets will seek guidance on central bank policy outlooks in the week ahead after recent data not only showed the global recovery gathering momentum in February, albeit with marked regional variations, but also showed rising inflationary pressures. A key global gauge of companies' input cost inflation rose to its highest for over 12 years in February, feeding through to the largest increase in average selling prices for goods and services for over a decade.
Interest rate meetings are held at the ECB and Bank of Canada, and will be closely watched amid growing concerns over rising bond yields. Despite recent market volatility, we continue to expect the ECB to deliver on its forward guidance, whereby pandemic-related (PEPP) net purchases are extended to at least March 2022 with reinvestments to at least the end of 2023. Similarly, in Canada, the central bank has pledged to keep interest rates at 0.25% until excess capacity is eroded, which at its last meeting the bank didn't expect to see until 2023.
Speeches from BoE and RBA governors Bailey and Lowe are also scheduled for the week, and will be watched respectively for clues as to appetite for negative rates in the UK and for the Australian central bank's commitment to yield control after recent intervention in the bond markets.
In the US, the monthly budget statement is accompanied by job openings and jobless claims numbers, as well as the initial March reading of the University of Michigan's consumer sentiment indicator. The latter will be eyed for further signs of consumers boosting the economic recovery, which gained momentum in February amid further stimulus. Producer price data will also be watched after recent surveys showed signs of inflationary pressures building.
In Europe, a fresh estimate of fourth quarter GDP (currently thought to have shrunk 0.7%) is released alongside industrial production numbers for January. The latter are expected to show manufacturing helping ameliorate a downturn in the service sector during the first quarter. UK GDP data are also updated for January, with survey data hinting at a marked downturn as a new national lockdown hit activity, with business woes exacerbated by Brexit-related disruptions.
In Asia, China's trade numbers will come under scrutiny after recent signs of supply delays hampering trade flows and curbing exports. Inflation numbers are meanwhile expected to remain subdued. A new estimate of fourth quarter GDP is also due out of Japan, the earlier estimate having beaten expectations with a 3.0% q/q gain as the economy rebounded from COVID-19 restrictions, though more recent data have signalled some cooling of the recovery.
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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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