The worldwide releases of November manufacturing PMI surveys will provide important signals for fourth quarter growth and inflation trends for global economies. A number of countries will also be updating their third quarter GDP figures.
While euro area inflation statistics will play a key role in determining the policy path at the European Central Bank, Japanese inflation, industrial output and retail sales data will help gauge future Bank of Japan policy.
Other key data include US PCE price index and housing figures, as well as China’s industrial profits. The Bank of Korea will also decide on monetary policy.
ECB policy in focus
Euro watchers will keenly monitor the release of advance inflation data for November next week. Expectations are for headline inflation to remain below the ECB’s 2% target. However, flash PMI data continued to point towards rising inflationary pressures as demand conditions strengthen further, suggesting that underlying inflation is becoming more ingrained. When charted against historical ECB policy decisions, the composite price pressures gauge has clearly moved into territory normally associated with a tightening of monetary policy.
US inflation
US inflation has remained below the Fed’s 2.0% target for over five years despite strengthening economic growth and a tighter labour market, highlighting the difficulty faced by the US central bank in spurring consumer price inflation.
With latest FOMC minutes raising concerns on weak inflation, analysts’ focus will be on the updated core PCE price index for October, with market expectations of an annual growth of 1.4%. Despite worries about a lack of inflation, Fed officials remain supportive of raising interest rates, according to the FOMC minutes.
Markets are pricing in over a 90% chance of rates rising again in December, and flash PMI surveys signalled solid economic activity midway through the fourth quarter, adding to the case for another rate hike.
Alongside updates to US Manufacturing PMI data, analysts will also look to second estimates of third quarter GDP growth as well as data on new home sales and personal spending, which will provide further clues on household consumption.
Key data releases for Japan
In Japan, a fresh batch of official data, including inflation, unemployment, industrial production and retail sales, will provide details on economic activity and price trends at the start of the fourth quarter. Flash PMI data indicated that manufacturing growth in Japan gained further momentum in November, although faster output growth wasn’t accompanied by upward pressures on prices: intense competition led firms to raise selling prices only modestly despite sharp cost increases.
Korea poises to hike base rate
The Bank of Korea will meet to set its latest key base rate, which currently stands at a record low of 1.25%. Forecasters are anticipating the first rate hike of 25 bps in over six years following stronger-than-expected third quarter GDP growth.
Recent PMI data showed a further improvement in the manufacturing sector at the start of the fourth quarter, as well as rising inflationary pressures, building the case for tighter monetary policy. The Nikkei South Korea Manufacturing PMI survey for November will be published next Friday, which provides a key signal to the health of the economy midway through the final quarter of 2017.
Other key Asian data releases include India’s third quarter GDP, as well as the Caixin and NBS PMI surveys for China.
Disclaimer: The intellectual property rights to these data provided herein are owned by or licensed to Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon.
In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are either registered trademarks of Markit Economics Limited or licensed to Markit Economics Limited. Markit is a registered trade mark of Markit Group Limited.