Economic Preview - Week of 28 May 2018

• Worldwide manufacturing PMI surveys to be eyed for global growth and trade trends
• US employment report to add to Fed rate hike projections
• ECB watchers await eurozone inflation and jobless numbers
• Emerging markets in focus with release of PMI data as well as GDP for India and Brazil

Upcoming manufacturing PMI surveys will give a guide to global economic trends halfway through the second quarter, while the US employment report and inflation data will add to the debate on the pace of Fed tightening. A host of GDP releases will meanwhile provide updated insights to economic growth trends at the start of the year, including key emerging markets.

Manufacturing PMI updates

May's worldwide PMI surveys will be closely watched after recent surveys have indicated that the pace of industrial expansion has shifted in a lower gear, led by a marked slowing in global export flows. Weaker eurozone and UK growth has contrasted with improving trends in the US, while emerging markets (notably China) have looked particularly susceptible to the waning of global trade. The surveys will also be scrutinised for signs of higher oil prices feeding through to manufacturing costs and dampening consumer spending.

US employment report

Views on the pace of Fed tightening will meanwhile be influenced by personal consumption expenditure price data and the May employment report. The former looks likely to accelerate, given recent strong survey data, while the latter will include data on non-farm payrolls, wage growth and unemployment. IHS Markit's flash PMI survey data for May point to a jobs gain slightly in excess of 200,000, a number which would fuel further expectations of up to three further rate hikes in 2018. Markets are pencilling-in a 185,000 gain. However, the central bank will also like to see wage growth accelerating after somewhat mixed data in recent months. The US will also likely see a modest upgrade to first quarter GDP.

Eurozone inflation numbers

The eurozone sees new official data which are likely to show an upturn in inflation alongside a drop in unemployment, corroborating recent survey findings. GDP releases for Italy and France will also be eyed for updated views on first quarter economic growth, while the final manufacturing PMI surveys will add detail on second quarter trends.

Emerging markets

The week also sees GDP releases for Brazil and India, which will give a renewed insight into trends, with both expected to show further modest improvements in economic performance, the former continuing to pull out of its longest recession in recent history, while the latter shows further recovery from policy disruptions, notably the higher sales tax.

* Up to April 2018

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Chris Williamson, Chief Business Economist, IHS Markit
Tel: +44 207 260 2329
chris.williamson@ihsmarkit.com

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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