Week Ahead Economic Preview: Week of 19 April 2021

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• Flash PMI survey data for the US, Eurozone, Japan, UK and Australia
• ECB, Bank of Canada rate setting meetings
• UK labour market and retail sales updates

Interest rate decisions are scheduled at central banks in the eurozone, Canada, Indonesia and Russia in a week which also sees the publication of flash PMI surveys covering more than half of the world's economic output.

Other notable releases include industrial production, trade and inflation numbers for Japan, UK labour market, retail sales, state borrowing and inflation statistics, plus Eurozone bank lending and confidence surveys. The US sees jobless claims and homes sales updates.

Early indicators of economic performance at the start of the second quarter are provided by April's flash PMIs, covering both manufacturing and services. The March data showed the US outperforming among the largest developed economies, though growth bounced back in the UK and Eurozone leaving only Japan in decline. The strength of the European PMIs surpassed all economists' expectations, according to polls, as business activity surged in response to brightening outlooks. However, growth disparities reflected differing COVID-19 containment measures, notably hitting service sector growth in Japan, as well vaccine roll-out progress. The latter has lifted confidence most notably in the US and the UK, though it's clear that stimulus measures are also playing a key role in the US.

A more worrying feature of the PMIs is the recent spike in prices. Prices globally have been rising at the sharpest rate for over a decade, linked to a combination of near-record supply delays and surging demand as economies reopen, pushing bond yields higher.

The PMI survey data follow Wednesday's ECB rate setting meeting. No further action is anticipated until at least June after policymakers stepped up the pace of asset purchasing at their last meeting in response to rising bond yields, especially as the minutes showed disagreement on the action. But some policymakers have also grown concerned over the slow vaccine roll-out and the reliance on government support schemes.

The Bank of Canada meanwhile meets amid signs not only that the recovery heating up, the PMI having hit a record high, but so too is the housing market. However, no change in policy is expected anytime soon.

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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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