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Week Ahead Economic Preview: Week Of 31 August 2020

Published 28/08/2020, 07:33
  • Worldwide manufacturing and services PMIs
  • US monthly employment report
  • GDP data for Brazil, India, Australia and S Korea
  • Monetary policy meeting in Australia
  • A comprehensive view of global economic conditions midway through the third quarter will be provided by the worldwide PMI surveys, with the week closing with the all-important US non-farm payroll report. Other key releases include GDP for India, Brazil, Australia and South Korea, while policy action comes from Australia.

    Global PMI data will be eagerly awaited to assess whether the economic rebound from COVID-19 lockdowns has persisted into August. Flash PMI data brought mixed news: although the G4 largest developed economies collectively saw the shapest expansion since March 2019, only the US and UK reported faster growth. The Eurozone's expansion lost pace and Japan remained firmly stuck in contraction. The final PMI numbers will provide more detail on both manufacturing and services conditions in all major developed and emerging markets. Detailed sector PMIs will also add insight into winners and losers: July saw auto makers lead the global upturn but conditions remained especially tough for tourism and recreation.

    In addition to the IHS Markit and ISM PMI data, Friday's US employment report includes nonfarm payrolls, unemployment and wage growth. July saw 1.8 million added to the payroll count, but that still left the count almost 13 million below the pre-pandemic peak and was down from a 4.2 million increase in June, hinting at a slowing recovery. The unemployment rate fell 0.9% points to 10.2%. Analysts are expecting around 1.5 million jobs in August to be added and a drop in the jobless rate to just under 10%.

    In Europe, the PMI data are joined by Eurozone inflation and unemployment numbers, plus retail sales data. German factory orders and retail sales are also updated, as are mortgage lending and credit data in the UK.

    In Asia Pacific, PMI data will add clues as to the durability of China's upturn, while GDP in India and Australia are expected to show economies contracting sharply. The RBA is meanwhile expected to hold rates unchanged at 0.25% but analysts will be eager for clues as to what might trigger further action.

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