March flash PMIs, UK inflation, Fed comments in focus
March flash PMIs will be released in the coming week for a first look at economic conditions since the outbreak of the Ukraine war. A series of Fed speakers will also be watched post the Fed FOMC meeting with central bank meetings also scheduled in Switzerland, Norway and the Philippines. UK, Singapore and Malaysia inflation figures are meanwhile updated for February but also watch out for US durable goods orders, US, UK and eurozone consumer sentiment, US fourth quarter GDP revisions and production data out of Taiwan and Thailand.
Soaring inflation rates have seen the US Fed raise interest rates for the first time since 2018 and the Bank of England hike for a third successive meeting, with higher inflationary pressure expected amid persistent elevated prices across energy and broader commodity markets (see box). A greater uncertainty will be the resilience of economic growth against the headwinds of these higher borrowing costs, a widespread cost of living crisis, geopolitical stress from the invasion of Ukraine, China's latest COVID-19 shutdowns, financial market volatility and the withdrawal of pandemic fiscal stimulus.
The coming week will provide some clues as to how robust business and consumers are coping in the face of these headwinds. Consumer sentiment data from the Eurozone, UK and US are widely expected to see households struggling under the weight of soaring energy bills, while business sentiment looks set to be hit by the uncertainty caused by the Ukraine war and renewed concerns in manufacturing over supply chains and costs. Less clear will be the extent to which downward risks to output across manufacturing and services have been offset by the reopening of economies from COVID-19 restrictions. Policymakers will be hoping to see some resilience here.
Commodity price spike
In addition to providing the first major glimpse into economic growth, supply chains and business confidence following the invasion of Ukraine, the coming week's flash PMI business surveys will provide guidance on the extent to which inflationary pressures are continuing to build, with particular concern relating to the potential passthrough of higher energy and other commodity prices through the value chain to consumers.
The invasion has seen commodity prices spike higher: the IHS Markit Materials Price Index (MPI) jumped another 5% in the second week of March, following the record-breaking 8.1% increase the week before. Commodity prices now sit 11.7% above the previous all-time high set in April 2011.
Brent oil reached $129 per barrel for the first time since 2008 but prices for industrial metals also soared amid trading volatility and concerns over future supply from Russia. The MPI's ferrous sub-index jumped 10% and the nonferrous metal sub-index increased 2% with unprecedented turbulence in the nickel market leading to the suspension of trading in the nickel contract on the London Metal Exchange (LME).
While the commodity price spike itself is a concern for the inflation outlook, supply constraints arising from both the Ukraine crisis and new lockdowns in China add further risks to persistent elevated price pressures, while also choking economic growth (see special report on page 4). S&P Global Mobility research already sees the production of 2.6 million vehicles at risk in 2022 due to the war's impact on supply chains.
The PMI suppliers' delivery times index, and input costs and selling prices gauges, will therefore provide key insights into the developing inflation picture, both in manufacturing and the larger services economy.
Key diary events
Monday 21 Mar
Japan Market Holiday
New Zealand Trade (Feb)
China (Mainland) Loan Prime Rate 1Y, 5Y (Mar)
Hong Kong SAR CPI (Feb)
Germany Producer Prices (Feb)
Taiwan Export Orders (Feb)
United Kingdom CBI Distributive Trades (Mar)
Tuesday 22 Mar
Canada Producer Prices (Feb)
Wednesday 23 Mar
South Korea PPI (Feb)
Thailand Customs-Based Trade Data (Feb)
Thailand Manufacturing Production (Feb)
Singapore Consumer Price Index (Feb)
United Kingdom Inflation (Feb)
Taiwan Industrial Output (Feb)
United States New Home Sales (Feb)
Eurozone Consumer Confidence (Mar, flash)
Thursday 24 Mar
Japan BoJ Meeting Minutes (Jan)
Australia IHS Markit Flash PMI, Manufacturing & Services*
Japan au Jibun Bank Flash Manufacturing PMI*
UK CIPS/IHS Markit Flash PMI, Manufacturing & Services*
Germany IHS Markit Flash PMI, Manufacturing & Services*
France IHS Markit Flash PMI, Manufacturing & Services*
Eurozone IHS Markit Flash PMI, Manufacturing & Services*
Philippines Policy Int Rate (24 Mar)
Taiwan Jobless Rate (Feb)
Switzerland SNB Policy Rate (Q1)
Norway Norges Bank Key Policy Rate (24 Mar)
United States Durable Goods (Feb)
United States GDP (Q4, final)
United States Initial Jobless Claims
Friday 25 Mar
United Kingdom GfK Consumer Confidence (Mar)
Singapore Manufacturing Output (Feb)
Malaysia CPI (Feb)
United Kingdom Retail Sales (Feb)
Germany Ifo Business Climate New (Mar)
United States University of Michigan Sentiment (Mar, final)
United States Pending Sales Change (Feb)
What to watch
March flash PMIs across developed economies
March flash PMIs will be released across the US, UK, eurozone and the APAC economies of Japan and Australia in the coming week.
February PMIs signalled a revival of growth economic growth as the Omicron wave faded and business optimism also improved. Since then, however, Russia's invasion of Ukraine has led to a steep rise in commodity prices and further supply chain issues. Flash PMI data, typically based on approximately 85%-90% of total PMI survey responses each month, will shed light on conditions across demand, output, prices and sentiment - with the severity to which these indicators reflect the effect of the war being the key focus.
North America: US Q4 GDP final estimate, Fed member appearances
Following the conclusion of the Fed FOMC meeting this week, where the Fed exercised a 25 basis points hike to rates and signalled the intention to commence shrinking its $8.4 trillion bond portfolio, the series of Fed members' appearances in the coming week will be in focus for further details into the Fed's plans going forward. This will be important amid the uncertainties brought about by recent developments including the Ukraine invasion which is expected to weight on GDP growth in the first quarter.
Europe: UK inflation and retail sales data, eurozone consumer confidence, Norges bank, SNB policy meetings
UK inflation data will be released in the coming week with February IHS Markit / CIPS UK Composite PMI preluding yet another likely rise in consumer price inflation from its current 30-year high of 5.5%.
Asia-Pacific: BSP policy meeting, Singapore, Malaysia CPI
Singapore and Malaysia inflation data will be due in the coming week amid expectations for continued elevated price trends. No change to Philippines' policy rate is meanwhile expected.
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