The following is an extract from S&P Global Market
Intelligence’s latest Week Ahead Economic Preview. For the full
report, please click on the ‘Download Full Report’ link.
Inflation updates for the US, UK, Eurozone, Japan and
Canada
Into the final weeks of 2023, more inflation data will keep the
markets occupied with CPI numbers out of the UK, Eurozone, Japan
and Canada while the US updates core PCE data. Additionally, final
Q3 GDP updates will also be due from the US and UK while central
bank meetings in Japan and Indonesia are also anticipated.
The final Fed meeting of the year fuelled further rate cut
expectations with the market having almost fully priced in 50 basis
points of rate cut by May according to the CME FedWatch tool. This
was as the Fed signalled the possibility of easing monetary policy
by 75 basis points in 2024, recognising that inflation has eased in
recent months. Indeed, the latest S&P Global Flash US PMI
continued to outline the likelihood for CPI to head lower despite
the economy gaining some momentum in December amid loosened
financial conditions (see special report). US core PCE will
therefore be in focus while other high frequency releases,
including the US personal income and spending, durable goods
orders, and building permits, are also updated for a check on
November conditions. Separately, Q3 GDP will be updated, though
this will be a backward-looking piece of data.
Meanwhile November UK, Eurozone and Japan inflation figures are
anticipated with
PMI price data having hinted at further cooling of underlying price
pressures. Japan’s inflation figures will be among the
highlights, especially with the Bank of Japan (BoJ) widely expected
to exit their negative interest rate regime, albeit not in the
upcoming meeting on Friday, December 22. Rhetoric from the meeting
coupled with the upcoming inflation indications from Japan will be
closely watched for the yen – especially with the BoJ seen to be an
outlier central bank, set to hike rates while global central banks
including the Fed move in the opposite direction.
Besides the Bank of Japan, Bank Indonesia will also convene
though no changes are expected. Meeting minutes from the Reserve
Bank of Australia will also be due for insights into central
bankers’ thoughts amid still-elevated inflation in Australia and
softening growth conditions.
Flash PMI data signal widening growth divergences
Early PMI survey data for December from S&P Global showed
the major developed economies collectively stagnating. However,
trends varied, with the eurozone slipping deeper into decline to
signal a recession, but modest growth was seen in the UK, Japan and
US.
The surveys continue to indicate that service sector growth
remains very subdued in the G4 on average relative to the growth
surge seen in spring and summer, but looser financial conditions –
based on expectations of lower interest rates in 2024 – have
benefitted the US and UK in particular as 2023 draws to a close.
Manufacturing, in contrast, remains firmly in decline, with output
falling across all four economies, dropping most notably in the
eurozone.
Further falls in backlogs of work in both sectors meanwhile bode
ill for the near-term outlook, but also hint at some potential
further cooling of inflation. Service inflation remained elevated
by historical standards, most noticeably in the UK, and the
upcoming dataflow in this sector will be key to help assess policy
developments in 2024.
For our full recap of the PMIs in 2023, download our
“Shifting Sands” report.
Key diary events
Monday 18 Dec
Singapore NODX (Nov)
Germany Ifo Business Climate (Dec)
United States NAHB Housing Market Index (Dec)
Tuesday 19 Dec
Australia RBA Meeting Minutes
Japan BOJ Interest Rate Decision
Malaysia Trade (Nov)
Eurozone Inflation (Nov, final)
United Kingdom CBI Industrial Trends Orders (Dec)
Canada Inflation (Nov)
United States Building Permits (Nov, prelim)
United States Housing Starts (Nov)
Wednesday 20 Dec
Japan Trade (Nov)
China (Mainland) Loan Prime Rate (Dec)
Germany GfK Consumer Confidence (Jan)
Germany PPI (Nov)
Turkey Consumer Confidence (Dec)
United Kingdom Inflation (Nov)
Switzerland Current Account
Taiwan Export Orders (Nov)
Eurozone Current Account (Oct)
Eurozone Consumer Confidence (Dec, flash)
United States Current Account (Q3)
United States CB Consumer Confidence (Dec)
United States Existing Home Sales (Nov)
Canada BoC Summery of Deliberations
Thursday 21 Dec
Indonesia BI Interest Rate Decision
France Business Confidence (Dec)
Hong Kong SAR Inflation (Nov)
Turkey TCMB Interest Rate Decision
Canada Retail Sales (Oct)
United States GDP (Q3, final)
Friday 22 Dec
Japan Inflation (Nov)
Japan BoJ Meeting Minutes (Oct)
Thailand Trade (Nov)
Malaysia Inflation (Nov)
United Kingdom Retail Sales (Nov)
United Kingdom GDP (Q3, final)
France Consumer Confidence (Dec)
Spain GDP (Q3, final)
Taiwan Unemployment Rate (Nov)
Italy Business Confidence (Dec)
Canada GDP (Oct)
United States core PCE (Nov)
United States Durable Goods (Nov)
United States Personal Income and Spending (Nov)
United States New Home Sales (Nov)
United States UoM Sentiment (Dec, final)
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What to watch
Americas: US core PCE, Canada inflation data and US
building permits, personal income and spending and final Q3 GDP
update
Post the December Fed meeting, US core PCE will be in focus in
the coming week. This comes after US CPI eased to 3.1% in November
while core CPI inched up slightly to show a 0.3% monthly increase,
though both figures were in line with consensus expectations.
Separately, the US also releases a Q3 GDP update, in addition to
building permits, durable goods orders, new home sales, consumer
confidence and personal income and spending figures.
Meanwhile in Canada, November’s inflation figure will be due
Tuesday. Encouragingly, price indicators from the
S&P Global Canada Composite PMI suggested that input cost
inflation had eased in November.
EMEA: Eurozone, UK inflation data, UK retail sales and
final Q3 GDP, German GfK, Ifo survey data,
In the UK, November’s inflation figures will be released
Wednesday. Likewise for the UK,
PMI price indicators have hinted at a slight easing of price
pressure into November, though some stickiness may be observed
thereafter. Retail sales and final Q3 GDP will also be released,
with the former closely watched for any improvements in activity
into the final months of the year.
The eurozone will also update November inflation figures
following the preliminary headline and core CPI readings of 2.4%
and 3.6% respectively. Also watch out for Spain third quarter GDP
release and producer prices in Germany.
APAC: BoJ, BI meetings, RBA meeting minutes, Japan
inflation and trade data
In APAC, final central bank meetings of the year unfold in Japan
and Indonesia. The Bank of Japan will be in focus despite no
changes to the current negative interest rate setting being
anticipated at the upcoming meeting, as hinted by officials. This
is as the BoJ is set to hike rates by the end of April according to
market expectations, though central bankers remain vigilant of data
developments, placing the focus also on Japan’s inflation and trade
releases in the coming week.
Special reports
US flash PMI ends 2023 at highest since July amid looser
financial conditions – Chris Williamson
APAC manufacturing sector rebounds in late 2023
– Rajiv Biswas
Purchasing Managers’ Index™ (PMI®) data are compiled by S&P Global for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
