Written Commentary
Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist
Manufacturing PMIs and German & Italian CPI top data schedule; Korea Trade and swathe of mostly robust Australia indicators to digest; UK lending data and US Construction Spending ahead; plenty of Fed & ECB speakers; CERAweek and BMO Metals & Mining conferences
Germany/Italy CPI: NRW reading implies another upside miss in Germany; energy and airfares seen pushing Italian CPI higher
Manufacturing PMIs: China readings disappoint, strength seen elsewhere above all US; price indices in focus
EVENTS PREVIEW
A very busy schedule awaits as the new month gets under way with Manufacturing PMIs very much dominating the data calendar, which also has Korea’s Trade data to digest, while ahead there are German and Italian CPI along with US Construction Spending. ECB and Fed speakers are again plentiful, while the week’s two major commodity conferences get under way – CERAweek and the BMO Metals and Mining Conference; while Zoom tops the run of US corporate earnings.
The German and Italian CPI data will be very closely watched, and as with the French and Spanish data on Friday, there may be some divergence with Italian HICP seen falling 0.4% m/m in m/m terms leaving the y/y rate unchanged at 0.7%, though rising energy prices and airfares may exercise rather more upward pressure than the consensus assumes. German HICP is expected to rise 0.5% m/m, with energy prices also likely to be a key driver, but this would still leave the y/y rate unchanged at 1.5% y/y after January’s surge on the back of tax rises and index compositional effects, but with another very sharp rise in North-Rhine Westphalia (0.8% m/m), the risks look to be to the upside of the consensus, and per se also for tomorrow’s Eurozone CPI.
Manufacturing PMIs are generally expected to remain robust across much of the world, though there will be disappointment at both the NBS and Caixin China PMIs turning out lower than expected on a combination of weaker export orders, slower production and weak labour demand. Elsewhere in Asia readings were largely robust, above all India, though both Thailand and Malaysia continued to see contraction. Forecasts for UK and Eurozone PMIs assume (as ever) no revision from robust ‘flash’ readings, but the focus will be mainly on the US Manufacturing ISM, which is forecast to be little changed at a very solid 58.6, despite expectations of a further small dip in Orders to 60.0 from 61.1. However the primary point of focus in the US (and elsewhere) will be Prices Paid, which is seen easing to 80.0 from a near 10 yr high of 82.1 in January, though the risks given the trend in energy and industrial commodity prices on the month, and continued supply chain disruptions in the chip sector look to be on the upside.
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