Week Ahead Economic Preview: Week Of 2 May 2022

 | Apr 29, 2022 11:12

h2 Worldwide April PMI data, Fed FOMC, BOE meetings, US payrolls

A busy week ahead packs both manufacturing and services PMI data releases for April to provide an update on the health of the global economy alongside central bank policy meetings at both the US Federal Reserve and the Bank of England. Meanwhile April's US labour market report will be released on Friday with a string of inflation figures also due from APAC economies.

Despite some positive earnings surprises posted so far from US corporates, the global equity market remains weighed by concerns over multi-decade high inflation rates, rising interest rates and slowing global growth (see special report ). The issue of slowing demand growth had become particularly prominent with new COVID-19 disruptions in mainland China and the Russia-Ukraine war. Further clues on the impact of these headwinds will be gleaned from the upcoming manufacturing and services PMI releases for April.

The focus also shifts to the central bank meetings, where policymakers in the US, UK and Norway are set to meet. In particular, the Fed and Bank of England are expected to continue on their rate hike cycles and any updates on their future policy paths will be closely watched amid growing worries that rising interest rates would hurt growth. As it is, April flash PMIs have already suggested that economic growth slowed in the US and UK as the strong pandemic rebound showed signs of fading.

In the official data docket, the April US jobs report will be the highlight. Consensus expectations point to strong job additions for April while the unemployment rate remains low, consistent with the Fed continuing on their rate hike path.

Meanwhile, CPI figures across various APAC economies including Taiwan, Thailand and the Philippines will be released. Early flash PMI data from neighbouring Japan and Australia suggested that IHS Markit Materials Price Index (MPI) increasing 2.2% last week as the war in Ukraine and lockdowns in China further fanned fears of persistent supply shortages.

However, while supply appears to have deteriorated in April, the demand side of the equation is more uncertain: note that the March PMIs showed global manufacturing output growth slumped to an 18-month low, led by a slowdown in growth of new orders and a fall in global trade. The output and new orders indices from the global manufacturing PMIs will need to be watched alongside the suppliers' delivery times index to get a comprehensive steer on the demand and supply fundamentals for commodity prices.