Week Ahead Economic Preview

Week Ahead Economic Preview

Key Points: Worldwide manufacturing and services PMIs will be released next week for a detailed look into November economic conditions. The turn of the month also brings the US jobs report for November and eurozone inflation data, all of which will be watched intently for central bank policy guidance.

The past week has been one of see-sawing sentiment towards inflation and central bank outlooks, particularly the Fed. The renomination of Fed chair Jerome Powell – a relatively less dovish choice compared to Lael Brainard (now also the vice-chair pick) – saw equities trading lower at the start of the week. That changed ahead of the Thanksgiving holidays, whereby data, including the IHS Markit Flash US Composite PMI, revealed a steady recovery of the US economy. Details from the November Fed FOMC minutes meanwhile pointed to mixed views on inflation but hinted at a preparedness to raise rates “sooner than participants currently anticipated” if warranted by the data, therefore placing additional focus on the week’s upcoming employment report, another of the Fed’s highly watched gauges. 

The inflation situation meanwhile also runs hot in the eurozone, as indicated by the flash PMI data. The key focus for the region will therefore be on the flash HICP inflation reading.

APAC economies will get a fresh set of PMI updates for November, one keenly watched for sustained growth amid the recovery from the latest Delta wave and for any signs of supply constraints abating.

APAC Special Report: “Thailand: Gradual Recovery as COVID-19 Wave Eases” by Rajiv Biswas, APAC Chief Economist at IHS Markit

Thailand had considerable success in containing its domestic COVID-19 pandemic during 2020 and the first quarter of 2021. However, the situation deteriorated in the third quarter of 2021, with an escalating COVID-19 wave driven by the more highly transmissible Delta variant that resulted in a rising death toll and economic slowdown.

The international tourism sector, which was a major growth driver prior to the pandemic, has been in a protracted and deep slump since April 2020. However, the decision by the Thai government to reopen international borders for tourists from 63 countries from November has created new hopes for economic recovery in 2022.

(For further highlights, see pages 7-9 of the attached report)

Special Focus: “Flash PMIs signal stronger developed world growth, but rising COVID-19 cases cloud outlook” by Chris Williamson, Chief Business Economist at IHS Markit

November’s preliminary PMI numbers show the developed world’s economies continuing to grow at above trend rates, spurring further solid job creation. However, supply disruptions continue to run at near-record rates, showing few signs of easing since the unprecedented delays reported in October, stymieing manufacturing growth and contributing to the steepest rise in input costs recorded in the history of the surveys.

Service sector growth meanwhile accelerated but is threatened by rising COVID-19 case numbers, notably in Europe, which have hit business confidence for year-ahead prospects.