Week Ahead Economic Preview: May Flash PMIs, Fed Minutes, RBNZ, BoK, BI Meetings

 | May 20, 2022 07:09

Flash PMI data for May will be released next Tuesday for a first look into economic conditions midway into Q2. Meanwhile, central bank updates will be in abundance with the May Fed FOMC minutes due while monetary policy meetings unfold in New Zealand, South Korea, and Indonesia. Key data to watch also include US, German, and Taiwan GDP data, while April US personal income and consumption figures are also expected.

Inflation and growth concerns remain centre stage this week. Despite a solid US retail sales reading in April, disappointing earnings performance reported by US retailers dampened sentiment this week. This again heightens concerns over slowing growth, casting a cloud over global equities. Meanwhile, Fed speakers, including Fed Chair Jerome Powell, reiterated their focus on taming inflation, which adds to concerns over slowing economic growth.

Given this backdrop, next week's flash PMI data and US economic data may be watched extra carefully for insights into growth and inflation conditions while the Fed minutes will be scrutinised for the Fed's thoughts on upcoming rate hikes. As far as April's PMI figures suggested, the US had seen surging inflationary pressures amongst the developed economies and the trend into May will be closely watched with the flash PMI figures. The Fed's preferred inflation gauge, the core PCE reading for April, will also be updated on Friday after core CPI surprised on the upside.

In APAC, central bank meetings will be held in Indonesia, New Zealand, and South Korea. While the RBNZ may continue on their rate hike cycle, and BI could pave the way for their first hike in June, the BoK will be watched with heightened uncertainty after the new central bank chief suggested that a 50-basis point hike should not be ruled out in the coming week. A string of economic data including Taiwan's Q1 GDP and Singapore's inflation reading is also lined up for APAC's week ahead.

h2 Flash PMI surveys: What to watch/h2

Flash PMI data for the US, eurozone, UK, Japan, and Australia will provide the first major clues as to the health of the world economy in May. measured globally , supply delays worsened and global factory output fell into decline for the first time since June 2020.

May's PMI data will therefore add further insights into the extent to which the Ukraine invasion and China's lockdowns are damaging supply chains and adding to inflationary pressures. However, the service sector data will also be of great interest in assessing the degree to which price pressures are feeding through from goods to services, notably via wages, as these second-round inflation effects could have a major influence on monetary policy.

Importantly, the PMIs will also reveal just how resilient economies have been amid the growing headwinds of geopolitical uncertainty, supply chain issues, and soaring inflation. The key leading indicators to watch in this respect be the strength of demand signalled by the survey's new orders indices as well as the level of business confidence indicated by the future expectations indices.

Get The App
Join the millions of people who stay on top of global financial markets with Investing.com.
Download Now