Week Ahead Economic Preview: Week of 28 February 2022

 | Feb 25, 2022 06:22

h2 Worldwide PMIs, US payrolls, BoC, RBA and BNM policy meetings

Markets will inevitably be dominated by the Ukraine crisis, though from an economic data perspective worldwide manufacturing and services PMIs will be released, with the first trading week of March also bringing the latest US labour market report. Central bank meetings in Canada, Australia and Malaysia will also be in focus while key GDP data will be released across Switzerland, Australia, India and South Korea.

Following a week of heightened risk sentiment surrounding the Russia-Ukraine crisis, global markets will find the release of worldwide PMI figures in the coming week for both manufacturing and service sectors. Flash PMIs have so far preluded developed world growth rebounding in February, and the global figures will be in focus in the coming week for confirmation of this trend on a global scale. G4 economies had also seen price pressures persist according to flash PMIs, a trend that may only garner further attention as the latest geopolitical unrest pushes up commodity prices.

Central bank meetings will be in abundance at the start of March with the Bank of Canada (BoC) being the highlight in the coming week. Expectations are for the BoC to move ahead with raising interest rates from their March meeting to tackle rising inflation and amid a tight labour market.

On economic data, both inflation figures and GDP numbers will also be released around the world from the eurozone to Australia. Higher inflation figures may once again stoke concerns of more hawkish central bank pivots to avoid 'falling behind the curve'.

h2 Central banks juggle rising prices with downside risks to the growth outlook/h2

Final PMI numbers are published for manufacturing and services, which will allow central banks to assess economic trends prior to the Ukraine conflict. Flash PMI surveys for February showed economic growth rebounding from the worst of the Omicron economic impact, which turned out to be both modest and short-lived in the US and Europe. However, persistent supply constraints - both in terms of raw material supply issues and labour shortages - not only constricted manufacturing production but also led to further upward price pressures, which were in turn exacerbated by soaring energy prices.

These trends of recovering output and rising prices therefore put further pressures on major central banks to normalise monetary policy and manage inflation expectations lower.