Week Ahead Economic Preview: Week of 17 April 2023

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A busy week for economy watchers culminates with flash PMI updates, which will provide important assessments of business conditions at the start of the second quarter for the US, Eurozone, UK, Japan and Australia. Of primary importance is the degree to which stronger than anticipated growth in March, led by improving service sector performances, can be sustained in April given the headwinds of higher interest rates and banking sector stress. The PMI price indices will also be eagerly awaited for inflation signals (see box on right).

However, before the flash PMIs, a flurry of official data releases will add to the economic picture in the first quarter.

In Asia, China will update its mainland GDP statistics which are widely expected to show an improvement on the sluggish 2.9% rate of growth seen in the fourth quarter of last year. PMI data have already risen sharply so far this year due to the reopening of the economy. Retail sales, industrial production and investment details will be important to monitor. Japan will meanwhile publish data on industrial production and its tertiary sector, as well as new inflation numbers after February saw a solid 3.3% annual rise.

In the Americas, the US flash PMI surveys are preceded by a variety of housing market data that will be important to monitor in terms of the impact of recent rate hikes. Canada meanwhile sees house price, retail sales, producer price and consumer price updates - all of which will be eyed for insights into whether the central bank has been correct to be the first major western central bank to pause its policy tightening. Also look out for Brazilian industrial production.

In Europe, final eurozone inflation numbers are anticipated to confirm the cooling of headline price pressures signalled by the flash data. It's also a crowded week in the UK economic data calendar, with official updates to the labour market and retail sales, as well as producer and consumer prices. The latter has proven worryingly stubborn in the UK, having risen slightly to 10.4% in February, and any further stickiness will drive up Bank of England rate hike expectations.

From a central bank perspective, the only decision this week comes for Indonesia, where rates are expected to remain on hold.

Inflation cooling, slowly

Recent official data are showing headline inflation cooling. Consumer prices in the US are now rising at an annual rate of 5.0%, down from 6.0% in February and almost half the 9.1% rate seen in May of last year. Rates are also cooling in Europe. In the eurozone, the annual rate of inflation has fallen to 6.9% in March from a peak of 10.6% last October. In the UK, the rate has proven stickier at 10.4% up to February, but this is down from a high of 11.1% last October. Base effects, notably from energy, have helped these reductions in the annual rate of inflation and should help further in the months ahead.

This cooling is confirmed by the PMI data, which showed firms' input costs rising globally at the slowest rate for 28 months in March, which should feed through to lower consumer price inflation in the coming months. However, it should be noted that even this lower PMI input cost index reading remains consistent with global consumer prices rising at an annual rate of approximately 4%, which could worry many central bankers, especially as the recent growth in costs is being buoyed by wage growth.

Hence the upcoming flash PMI data for April will be eagerly assessed not just for signs of recession risks, but of the extent to which inflation pressures in the service sector - which has been the main driving force of the recent expansion of output -is proving "sticky".

Key diary events

Monday 17 April

Greece Easter Holiday

United Kingdom Natwest Regional PMI

South Korea Trade Data (Mar)

Singapore Trade Balance (Mar)

Italy CPI (Mar)

Canada Wholesale Sales (Feb)

Tuesday 18 April

China GDP (Q1)

China Industrial Production (Mar)

China Retail Sales (Mar)

China Unemployment Rate (Mar)

United Kingdom Average Earnings (Feb)

United Kingdom Unemployment Rate (Feb)

Italy Trade Balance (Feb)

Eurozone Trade Balance (Feb)

Canada CPI (Mar)

Wednesday 19 April

Japan Industrial Production (Feb)

United Kingdom CPI (Mar)

United Kingdom PPI (Mar)

United Kingdom RPI (Mar)

South Africa CPI (Mar)

Eurozone CPI (Mar)

United States Mortgage Market Index

Canada Housing Stats (Mar)

India M3 Money Supply

Brazil Industrial Production (Feb)

Thursday 20 April

Japan Trade Data (Mar)

Germany PPI (Mar)

Spain Trade Balance

Belgium Consumer Confidence (Apr)

Greece Current Account (Feb)

Eurozone Trade Balance (Feb)

Canada New Housing Prices Index

Eurozone Consumer Confidence (Apr)

Friday 21 April

Brazil Holiday

Flash PMI (Apr)

South Korea PP (Mar)

Japan CPI (Mar)

Hong Kong CPI (Mar)

Canada Retail Sales (Feb)

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

What to watch

Worldwide Flash PMIs for April

Flash PMIs, set for release at the end of the week, will be keenly awaited, providing a preliminary view of economic developments and, in particular, whether the recent growth across the service sector will continue to mask the manufacturing malaise. Our special report on page 4 provides a recap on what to watch out for. Furthermore, providing a glimpse of the recent trends in inflation, the flash PMI results will be valuable in identifying the potential risks to global economy.

Americas: US Mortgage Market Index, Canada CPI, Housing data and retail sales

Data set for release over the course of the week covering North America will be highly illuminating in terms of the housing market. With the Fed continuing to hike interest rates, the passthrough effect on mortgages and households is still coming through. Look out for housing starts, building permits and mortgage application data.

Data for retail sales across Canada will also reveal consumer spending trends for March, published alongside house price, producer price and all-important inflation numbers.

Europe: Eurozone CPI, trade data and consumer confidence and UK inflation for March

The Eurozone is set the release its final CPI and trade figures. Latest data from S&P Global Eurozone Composite PMI indicated a further easing of price pressures in March as operating expenses across the manufacturing sector fell, and thus resulted to the softest rise in charges for the provision of goods and services in nearly two years.

The UK is also set to release its figures for inflation for March as well as important labour market data, which notably include wage growth statistics.

Asia-Pacific: China GDP, industrial production, retail sales and unemployment data, Japan industrial production, and Singapore trade data

Some strong sets of data for mainland China are scheduled to be released in the coming week. This includes GDP (Q1), industrial production and retail sales figures as well as investment and unemployment data. All of which will give a holistic view of the economy amid its reopening.

Elsewhere, key releases from APAC include Japan's industrial production and Singapore's trade data.

Special reports:

Global growth accelerates in March but doubts persist regarding recession risks - Chris Williamson

Vietnam Economy Moderates in Early 2023 - Rajiv Biswas

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Purchasing Managers' Index™ (PMI^®) data are compiled by S&P Global 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.

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