Week Ahead Economic Preview: Week of 30 May 2022

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Intelligence’s latest Week Ahead Economic Preview. For the full
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Worldwide May PMIs, US non-farm payrolls, BoC meeting

Worldwide PMI releases for May will be eagerly
awaited with the turn of the month in the coming week. The first
week of June also brings US labour market report
on Friday. Meanwhile the Bank of Canada convenes
to update their monetary policy settings. In the data docket, a
string of inflation updates will be anticipated
from the eurozone, Germany and various Asian
economies. GDP figures from
Australia and India will also be
in focus.

Market sentiment remained lacklustre this week amid
indications of slowing growth from flash PMI readings for major
developed economies and the May Fed minutes, which provided
little fresh impetus for equities. Disappointing high frequency UK
PMI data weighed on GBP/USD though sterling did manage to retrace
losses into the latter half of the week as the greenback lost
grounds. The euro meanwhile regained some strength after the
eurozone PMI remained encouragingly resilient. More detailed global
PMI data for May will therefore be eagerly watched for broader
growth and inflation trends in other parts of the world, perhaps
most notably mainland China.

Meanwhile the May labour market report will be the key economic
indicators to watch from amongst the upcoming US data releases.
Another strong set of readings, including an expected 350k addition
to non-farm payrolls, looks set to indicate a tight labour market.
Such a positive trend had also been preluded by employment
indicators from the
May S&P Global Flash US Composite PMI. With that said, what
may be of greater interest will be the wages and price picture,
given the Fed’s focus on inflation. The final PMI and ISM readings
will therefore be assessed for the price indications and
indications of supply conditions from key manufacturing hubs around
the world.

Amongst central banks, the Bank of Canada is due to announce its
monetary policy decision for June, with another rate hike following
the March increase is widely expected. Other items to watch
includes CPI numbers from the eurozone, Germany, South Korea,
Indonesia and Thailand.

Manufacturing PMI surveys: what to watch

Upcoming PMIs due out in the coming week will provide an
important steer to demand, supply and prices, and therefore also
policymaking. While supply deteriorated in April to hand pricing
power to sellers, as indicated by the global suppliers’ delivery
times index, the demand side of the inflation equation is more
uncertain. Note that the April PMIs showed global manufacturing
output falling globally amid a stalling in growth of new orders,
the latter being the most up to date indicator of demand
available.

The output and new orders indices from the global manufacturing
PMIs will therefore need to be watched alongside the suppliers’
delivery times index to get a comprehensive steer on the demand and
supply fundamentals for commodity prices. Much will depend on the
degree to which China’s lockdowns persist, as these have muddied
the global picture.

The degree to which the global expansion can be sustained will
also be dependent on the extent to which demand from consumers can
continue to recover after the current rebound, which has been
fueled by economies reopening after the loosening of pandemic
restrictions. The concern is that this rebound could fade quickly,
especially if inflationary pressures remain elevated to add to the
cost-of-living crisis.

It will also be important to watch the PMI backlogs of work
indices, as these will give a guide as to whether current robust
hiring will need to be sustained in the months ahead. The PMI
future output expectations index will also give clues as to whether
firms will remain keen on expanding capacity and additional
hiring.

Key diary events

Monday 30 May
US Market Holiday
Thailand Manufacturing Production (Apr)
Eurozone Business Climate and Consumer Confidence (May)
Germany HICP Prelim (May)

Tuesday 31 May
South Korea Industrial Output (Apr)
Japan Unemployment Rate (Apr)
Japan Industrial Output, Retail Sales (Apr)
China (Mainland) NBS Manufacturing PMI (May)
United Kingdom Nationwide House Price (May)
Switzerland GDP (Q1)
Thailand Trade (Apr)
Germany Unemployment (May)
United Kingdom Mortgage Lending and Approvals (Apr)
Eurozone HICP (May, flash)
India GDP (Q4)
Canada GDP (Q1)
United States Consumer Confidence (May)

Wednesday 1 Jun
South Korea, Indonesia Market Holiday
Worldwide Manufacturing PMIs, incl. global PMI* (May)
Australia GDP (Q1)
Indonesia Inflation (May)
Germany Retail Sales (Apr)
Eurozone Unemployment Rate (Apr)
United States ADP National Employment (May)
United States ISM Manufacturing PMI (May)
United States JOLTS Job Openings (Apr)
Canada BoC Meeting (1 Jun)
United States Fed Beige Book

Thursday 2 Jun
UK Market Holiday
Australia Trade Balance (Apr)
Switzerland CPI (May)
Eurozone Producer Prices (Apr)
United States Initial Jobless Claims
United States Factory Orders (Apr)

Friday 3 Jun
UK, China, Taiwan Market Holiday
Worldwide Services & Composite PMI* for US, Japan, India,
Russia, Eurozone, Brazil, Singapore, UAE, S Africa (May)
South Korea CPI (May)
Germany Trade (Apr)
Eurozone Retail Sales (Apr)
United States Non-Farm Payrolls, Unemployment, Average Earnings
(May)
United States ISM Non-manufacturing PMI (May)

* Press releases of indices produced by S&P Global and
relevant sponsors
can be found here.

What to watch

Worldwide manufacturing and services PMIs for
May

After
flash May PMI data showed economic growth coming under pressure in
major developed economies amid price pressures, detailed global
PMI data for both manufacturing and many country’s service sectors
will be released in the coming week. The broader global PMI data
are especially keenly awaited after economies such as the
UK saw a significant surprise on the downside, with the flash PMI
data showing inflationary pressures affecting economic
conditions.

Refer to our
PMI release calendar for the full schedule of monthly
releases.

North America: May labour market report, BoC
meeting

May’s US labour market report will be released on Friday with
Refinitiv consensus pointing to a 350k addition to non-farm
payrolls, the unemployment rate to fall to 3.5% and average
earnings growth to accelerate to 0.4% month-on-month, altogether
reflecting tight labour market conditions and keeping the Fed’s
focus on targeting inflation.

Separately, the Bank of Canada is set to update their monetary
policy. Following their March increase, another 50-basis point hike
is expected according to our forecast for the BoC, which also sees
their policy rate climb through the year.

Europe: Eurozone, Germany May inflation, unemployment
rates

In the eurozone, May inflation and unemployment rates will be
updated on Tuesday and Wednesday respectively. The
S&P Global Flash Eurozone PMI reflected that price pressures
eased from the April peak though remaining sharp by historical
standards, while jobs growth surged, led by the region’s rebounding
services sector.

Asia-Pacific: Australia, India GDP, South Korea
Indonesia, Thailand CPI, Japan employment data

In APAC, a couple of tier-1 data releases will be anticipated in
the week ahead including GDP figures across Australia and India
while South Korea, Indonesia and Thailand will update May inflation
figures. This will be alongside the series of PMI figures that will
shed light on May supply and inflation conditions in the wider APAC
region, and most notably revealing the latest situation in mainland
China among the ongoing effort to control the Omicron wave.

Special reports

Flash PMI: Headwinds Stifle Developed World Expansions
in May – Chris Williamson

Assessing the Economic Impact of the Indo-Pacific
Economic Framework – Rajiv Biswas

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full report

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.

Learn how to access and receive PMI data

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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