(ATF) Economic events
Investors are looking for further confirmation in the week ahead that the global economy has started to recover from the initial impact of the Covid-19 pandemic.
“China’s PMIs will be especially closely watched given its earlier relaxation of virus-related restrictions. So far the data have shown encouraging strength, with business activity across manufacturing and services growing in May at the fastest rate since the start of 2011. The data for China may therefore help gauge the extent to which early rebounds in activity from lockdowns might fade,” Chris Williamson, chief business economist at IHS Markit, said.
Barclays analysts said they expected the Caixin manufacturing PMI to edge lower to 50.2 in June from 50.7 previously on an expected moderation in export-related manufacturing production. China’s NBS manufacturing PMI would have moderated to 50.2 in June from 50.6 in May as the pace of the recovery in high frequency activity data, including coal consumption by major power plants, slowed in June, they said.
The Asian PMIs are accompanied by official industrial production numbers for Japan and South Korea, with trade data issued in Taiwan, Malaysia and South Korea, all of which will help gauge the depth of second-quarter downturns.
“In most other Asian economies, manufacturing should have continued to slow albeit at a reduced pace than in May. India and Indonesia are likely to remain at the low end of the Asian spectrum, given worsening Covid-19 situations in these countries,” Prakash Sakpal, ING Bank’s senior economist in Asia, said.
“May retail sales figures from Hong Kong and Singapore should reflect the extent of the hit to domestic demand in these economies. We expect the worse, around 50% YoY contraction in sales in both economies, as rising job losses depress spending,” he added.
Weak consumer spending should keep CPI inflation under downward pressure in most reporting countries during this week in South Korea, Indonesia, and Thailand, with Thailand's continuing to lead the way down, Sakpal said.
Also this week, US data releases include the monthly employment report, which includes unemployment and non-farm payroll data and Fed chair Jerome Powell will also give testimony before the Committee of Financial Services.
“Heading into a heavy laden indicator schedule that will determine whether recently instilled confidence over the unfolding economic recovery is indeed on solid footing, market participants will closely scour the incoming data performance before bolting into the long Fourth of July holiday weekend,” said Sam Bullard, senior economist at Wells Fargo. US financial markets are closed on Friday, which would mean the non-farm employment numbers will be reported a day earlier on Thursday. A Bloomberg poll said the labour department will report a 3 million increase in payrolls.