Economic Snapshot for the Week Ahead: Week of August 29, 2022

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A slew of economic data will be released in the week ahead, with the S&P Global Worldwide Manufacturing PMI set to dominate the headlines and the week ending with the US Nonfarm Payrolls. Additionally, second quarter GDP updates for India, South Korea, Italy, Canada, Poland and the Czech Republic will be watched for signs of a slowdown as the global economy continues face the downsides of high inflation, growing uncertainty and rising interest rates. Industrial production data for Thailand, Japan and Brazil will be released, along with a host of inflation data – which should confirm strong price pressures persist.

Market volatility has intensified in recent weeks due to rate hikes, energy market concerns and geopolitical tensions. Therefore, the PMI data – released towards the end of the week – will be watched with particular interest and will offer further updates on the performance of economies as recession fears grow. Last week’s flash data pointed to a harder-hit manufacturing sector where inflation rates and the repercussions of the supply disruption linger. Flash data indicated outright contractions in the US, Eurozone and Japan, and additional color on the global manufacturing outlook will be sought in the manufacturing PMIs for mainland China in particular.

US nonfarm payrolls data will also be highly anticipated by markets, especially as a key indicator of recession risk. While last month’s data beat forecasts, markets this week are expecting a sharp reduction in nonfarm payrolls growth, with August numbers expected to hit 290,000 (July: 528,000).

Second-quarter GDP updates provide a clearer view in the rear-view mirror, with markets set to watch growth trends in Canada, South Korea, India and Italy closely. Growth is expected in all areas, although moderations in the rate of expansion are likely to be observed, particularly in Italy.

Elsewhere, inflation data is circulating abundantly and rapidly, with flash figures from the Eurozone being arguably the most significant. At 8.9% in July, inflation appears to have remained high in August. Inflation figures for South Korea will also be released and, as in the Eurozone, rates are expected to be high.

Global PMIs will provide insights into industrial growth, supply chains and pricing pressures

Global manufacturing PMIs are out in the week ahead, with data following some disappointing flash PMI numbers. Looking at the four largest developed economies of the US, Eurozone, Japan and the UK (the “G4”), output contracted according to preliminary flash PMI data to a degree which – excluding the initial pandemic lockdowns – was the highest since the global financial crisis in 2009. Output contracted in both manufacturing and services for a second straight month, with accelerating rate of decline.

However, the surveys have brought some tentative good news on the inflation front. Supply constraints, which have been a key driver of rising prices during the pandemic, showed signs of easing in August, with the number of supplier delivery delays in G4 economies falling to the highest low since October 2020. At the same time, new orders for manufactured goods fell at one of the highest rates seen in the past decade. This combination of falling demand and supply inflation factors allowed industrial goods price inflation to subside abruptly to an 18-month low.

The comprehensive global release of PMIs will allow us to further monitor developments in demand, supply and prices, with the inclusion of data for mainland China and developing APAC economies providing new details particularly important.

Calendar key events

monday august 29

UK Market Day

Retail sales in Australia (July)

Japan Coincident Index Final (Jun), Unemployment Rate (Jul)

Retail sales in Ireland (July)

Tuesday August 30

Thailand Industrial Production (July)

Germany import prices (July), inflation (August)

Czech Republic GDP (Q2)

Inflation rate in Spain (August), business confidence (August)

Switzerland KOF Leading Indicators (August)

UK Mortgage Approvals (July)

Eurozone Consumer Confidence Final (August)

US House Price Index (June),

US Conference Board Consumer Confidence (August)

Wednesday August 31

Industrial production in South Korea (July)

Industrial production in Japan (July)

China’s NBS manufacturing PMI (August)

Inflation rate in France (August)

Unemployment rate in Germany (August)

Poland’s GDP growth rate (Q2)

Hong Kong Retail Sales (July)

Eurozone core inflation rate (August)

Inflation rate in Italy (August)

US MBA Mortgage Applications (August 26),

US ADP Employment Change (June)

India’s GDP (Q2)

Canada’s GDP (Q2)

Unemployment rate in Russia (July), GDP (July)

Thursday, September 1

S&P Global Manufacturing PMIs*

South Korea GDP Growth Rate (Q2), Exports (August)

Capital expenditure in Japan (Q2)

Home loans in Australia (July)

Inflation rate in Indonesia (August)

Retail sales in Germany (July)

UK nationwide house prices (August)

Italian GDP growth rate (Q2), unemployment rate (July)

Eurozone unemployment rate (July)

Brazil GDP (Q2), Trade Balance (August)

U.S. Unemployment Insurance Claims (August)

friday september 2

Inflation in South Korea (August)

Germany’s trade balance (July)

Change in unemployment in Spain (August)

Brazil Industrial Production (July)

India’s trade balance (July)

US Nonfarm Payrolls (August), Unemployment Rate (August), Factory Orders (July)

* Index press releases produced by S&P Global and relevant sponsors are available here.

** Includes composite PMI

What to watch

Global manufacturing PMIs

Following last week’s data flash – which showed contractions in private sector activity in Australia, Japan, France, Germany and the US, and a slowdown in the UK – global data on manufacturing will release further performance information amid growing economic uncertainty, falling demand, the global energy crisis and severe pricing pressures. Manufacturers have been particularly hard hit by recent developments, with concerns over rising inventory levels potentially aggravating any slowdown in end demand.

Americas: US Non-Farm Payrolls, Factory Orders and Canadian Q2 GDP

In the United States, the highlight of the week will be the monthly jobs report. July data saw a higher than expected increase in US nonfarm payrolls, but employment growth is expected to slow sharply, from 528,000 in July to 290,000 in August. US factory orders will be released soon after and will add color to manufacturing performance in July after worse than expected durable goods orders (which were flat, below consensus expectation of +0.5 %). Also be wary of Conference Board consumer confidence data and house price data, both of which are meant to gauge the impact of rising interest rates.

Elsewhere in the region, Canada is seeing a Q2 GDP update that should signal growth.

Europe: Eurozone CPI, Italy and Poland Q2 GDP, Germany Retail Sales Inflation and Unemployment

Many important economic releases are scheduled for Europe this week, with Italy, Poland and the Czech Republic all releasing second quarter GDP figures. Growth is expected to moderate in all three countries, although in the Czech Republic forecasters only expect an expansion of 0.2%.

Inflation, retail sales and trade data for Europe’s largest economy – Germany – will further shed light on economic performance. Recent data showed inflation and unemployment rates rising while retail sales contracted sharply. The Eurozone is also seeing significant updates in inflation and unemployment rates.

Asia-Pacific: GDP of India and South Korea in Q2, industrial production in Japan and inflation in Indonesia

Second-quarter GDP updates from India and South Korea will take center stage this week. Inflation data will also illuminate the price front in South Korea, where inflation figures have remained high. Indonesia also sees inflation figures released.

In Japan, unemployment figures, industrial production and consumer confidence data will all be released.

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Purchasing Managers’ Index™ (PMI™) data is compiled by IHS Markit for over 40 economies worldwide. Monthly data are drawn from surveys of senior executives of private sector companies and are available by subscription only. The PMI data set includes a headline figure, which indicates the overall health of an economy, and sub indices, which provide insight into other key economic drivers such as GDP, inflation, exports, l utilization, employment and stocks. PMI data is used by finance and business professionals to better understand where economies and markets are going and to uncover opportunities.

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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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