Economic preview for the week ahead: May flash PMI, Fed minutes, RBNZ, BoK and BI meetings
Flash PMI data for May will be released next Tuesday for a first look at economic conditions midway through the second quarter. Meanwhile, central bank updates will be plentiful with May’s FOMC minutes from the Fed, while monetary policy meetings unfold in New Zealand, South Korea and Indonesia. Key data to watch also includes GDP data from the United States, Germany and Taiwan, while April personal income and consumption figures in the United States are also due.
Inflation and growth concerns remain center stage this week. Despite a strong reading in April, the disappointing earnings performance reported by US retailers weighed on sentiment this week. This again heightens concerns about slowing growth, casting a cloud over global equities. Meanwhile, Fed speakers including Fed Chairman Jerome Powell reiterated their goal of controlling inflation, adding to concerns about slowing economic growth.
Against this backdrop, next week’s flash PMI and US economic data could be watched very closely for insight into growth and inflation conditions, while Fed minutes will be scrutinized for thoughts on the Fed on the next rate hikes. Turning to the April PMI numbers, the US has seen growing inflationary pressures among developed economies and the trend in May will be closely watched with the flash PMI numbers. The Fed’s favorite inflation gauge, the April reading, will also be updated on Friday after being surprised higher.
In Asia-Pacific, central bank meetings will be held in Indonesia, New Zealand and South Korea. While the RBNZ could continue its rate hike cycle and the BI could pave the way for its first hike in June, the BoK will be watched with heightened uncertainty after the new central bank chief suggested that a hike of 50 basis points should not be decided. out in the coming week. A slew of economic data including and is also scheduled for the coming week from APAC.
Flash PMI surveys: what to watch out for
Flash PMI data for the , , , , and will provide the first major clues as to the health of the global economy in May. April data had shown slowing economic growth in the US and UK as strong pandemic rebounds showed signs of waning. By contrast, a reopening of the eurozone and Japanese economies contributed to the improvement, helping to offset weakened manufacturing performance resulting from further supply delays. Input shortages were linked to the war in Ukraine and lockdowns in mainland China. China’s slowdown means that, measured globally, supply delays have worsened and global industrial production has fallen for the first time since June 2020.
The May PMI data will therefore add further insight into the extent to which Ukraine’s invasion and China’s lockdowns are damaging supply chains and adding to inflationary pressures. However, data from the services sector will also be of great interest in assessing the extent to which price pressures trickle down from goods to services, notably via wages, as these second-round inflation effects could have a major influence on monetary policy.
Importantly, the PMIs will also reveal how resilient economies have been in the face of mounting headwinds from geopolitical uncertainty, supply chain issues and soaring inflation. The main leading indicators to watch in this regard are the strength of demand signaled by the survey’s new orders indices as well as the level of business confidence indicated by the future expectations indices.
New orders PMI indicators
Calendar key events
Monday May 23
Canada Market Day
Trade data based on Thailand Customs (April)
Manufacturing output in Thailand (April)
Singapore Consumer Price Index (April)
Ifo business climate in Germany (May)
Taiwan Industrial Production (April)
Unemployment rate in Taiwan (April)
CBI UK Trends (May)
tuesday 24 may
Indonesia, Switzerland, Norway Market Holiday
Australia S&P Global Flash PMI, Industrials & Services*
Japan at Jibun Bank Flash Manufacturing PMI*
UK S&P Global/CIPS Flash PMI, Industrials & Services*
Germany S&P Global Flash PMI, Industrials & Services*
France S&P Global Flash PMI, Industry & Services*
Eurozone S&P Global Flash PMI, Industry & Services*
U.S. S&P Global Flash PMI, Manufacturing & Services*
Reverse Repo 7 days in Indonesia (May)
Wednesday May 25
New Zealand exchange rate (May 25)
Germany’s GDP (Q1)
GfK consumer sentiment in Germany (June)
Labor Force Survey Norway (March)
UK CBI Distributive Trades (May)
US Durable Goods (April)
US Fed FOMC Minutes (May)
Thursday May 26
Bank of South Korea Base Rate (May)
Capital expenditure in Australia (T1)
Singapore Manufacturing Output (April)
US GDP 2nd estimate (Q1)
Initial unemployment claims in the United States
Retail sales in Canada (March)
US pending sales change (April)
Friday May 27
Japan CPI, Tokyo Overall (May)
Retail sales in Australia (April, final)
Taiwan GDP (Q1, revised)
Euro area M3 annual growth (April)
Personal income and consumption in the United States (April)
US Core PCE Price Index (April)
United States UoM Sentiment Finals (May)
* Index press releases produced by S&P Global and relevant sponsors
can be found here.
What to watch
Flash manufacturing and services PMI for May
The global economy continued to grow for the 22nd consecutive month in April, but the rate of growth slowed amid a sharp decline in mainland China. While services activity maintained its expansion, the manufacturing sector recorded the first contraction in output since June 2020. This came amid deteriorating supply chain conditions, compounded by lockdowns in China and the war in Ukraine. As a result, inflationary pressures intensified, fueling further expectations of policy tightening by central banks.
So, the week ahead, the focus will be on growth, supply and inflation, looking at flash PMIs released for major developed economies including the US, UK, Eurozone , Japan and Australia.
Refer to our PMI release schedule for the full monthly release schedule.
North America: Fed Minutes, First Quarter US GDP, April Core PCE, Personal Income and Consumption Data
Minutes of the Fed’s May FOMC meeting will be released in the coming week following a rally that saw the Fed rise 0.5%. Subsequent comments from Fed speakers, including FOMC Chairman Powell, maintained the focus on inflation, underscoring the need to fight rising prices even if it meant slowing growth. With further 50 basis point rate hikes not on the cards, the minutes will come under scrutiny for the Fed’s plans going forward. PCE data will also be scrutinized for consumer spending and inflation indicators.
Europe: Germany Q1 GDP, Ifo business climate index
In addition to the PMI flash data, Germany’s detailed Q1 GDP data and Ifo business climate figures will be released next week, along with consumer confidence data.
Asia-Pacific: BI, RBNZ, BoK meetings, Taiwan GDP, Singapore CPI
Central bank meetings in Indonesia, New Zealand and South Korea will take place in the coming week, with the Reserve Bank of New Zealand (RBNZ) expected to raise rates according to our forecast. Another rate hike since a change in the head of the Bank of Korea (BoK) is also not ruled out for the May meeting while Bank Indonesia (BI) could pave the way for their rate hike in June.
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