Here Is What’s On The Economic Calendar In Asia Today – China PMIs for March
The start of the second quarter is always a key time for the global economy, as it serves as a benchmark for how the first three months of the year panned out. Though the first quarter saw solid growth, it wasn’t as strong as many had hoped. However, this did not stop markets from rallying in the second quarter, as we head into the final quarter of the year.
If we take a step back from the macroeconomic outlook and focus on fundamentals, it’s clear that the global economy is in a much better place than it was at this time last year. GDP growth has been accelerating in many developed economies, while emerging market economies are even healthier than they were a year ago.
What to Watch in the Week Ahead
China Manufacturing PMIs for April, Canadian Construction Spending for May
U.S. Nonfarm Payrolls for May, Japan Manufacturing PMI for May, UK Services PMI for May
ECB President Mario Draghi’s press conference
U.S. Treasury Secretary Steven Mnuchin’s St. Petersburg speech
19th Congress of the Communist Party of China
U.S. Nonfarm Payrolls
First up is the U.S. Nonfarm payrolls report for May, due out next Friday. We know that the U.S. economy added about 200,000 jobs in the first quarter, and most economists expect that this number will rise to around 200,500 in May. However, we could see a surprise move either way. The report for April was revised slightly downwards, and while it’s unlikely that the revisions will persist, they could move markets slightly if they are larger than expected.
Eurozone Retail Sales
Looking at retail sales, we have data for the Eurozone due on Tuesday. While we expect Eurozone retail sales to rise 0.8%, this is likely to be a worst-case scenario. The preliminary reading for March was a 0.9% rise, and according to the European Commission’s forecast, this number is likely to rise to a 1.8% increase in May. While it’s not a dead heat, we could see a slightly worse-than-expected reading for retail sales in the Eurozone help to cap gains in the EUR.
Eurozone Industrial Production
Looking at industrial production, we have data for the Eurozone due on Thursday. We expect the manufacturing production index to rise 0.5%, but we could see a surprise move either way. The preliminary reading for April was a 1.9% increase, but we’re likely to see a revision to this number. The market is likely to react either way, with traders likely to focus on the headline number.
Eurozone The Manufacturing PMI
Lastly, we have the manufacturing purchasing managers’ index (PMI) for the Eurozone due on Friday. The manufacturing PMI is calculated on the basis of surveys of production managers, and it’s the main gauge of the health of the manufacturing sector. The manufacturing PMI is expected to rise to 56.6 in May, up from 56.1 in April, but a number below 50 would indicate that the manufacturing sector is contracting.
China HSBC Flash Manufacturing PMI
Finally, we have the flash manufacturing PMI for China due on Tuesday. The flash manufacturing PMI is based on a survey of importers and is more volatile than the regular reading, and it tends to be more positive. We expect the flash manufacturing PMI for China to come in at 50.6 in May, up from 49.2 in April.
European Union Manufacturing PMI
Looking at the EU, we have the manufacturing purchasing managers’ index (PMI) for the Eurozone due on Thursday. The manufacturing PMI is calculated on the basis of surveys of production managers, and it’s the main gauge of the health of the manufacturing sector. The manufacturing PMI is expected to rise to 56.6 in May, up from 56.1 in April, but a number below 50 would indicate that the manufacturing sector is contracting.
Japan Services PMI
Lastly, we have Japan’s services PMI due on Wednesday. The services PMI measures the health of the services sector, which makes up about three-quarters of the Japanese economy. We expect the services PMI to rise to a 52.9 reading in May, up from 52.5 in April, which would signal that services businesses in Japan are expanding, and likely to give the yen a boost.
Commodity Corner: Gold Drops Below USD 1,300 an Ounce, Silver Hits a New All-Time High
Gold prices dropped below USD 1,300 an ounce for the first time since November 2016 on Monday, while silver hit a new all-time high. Crude oil prices extended their recent losses, while the Japanese yen and the US dollar also remained under pressure.
As we move into the final quarter of the year, it’s worth looking back at how the first quarter pan panned out for the global economy. Though growth was relatively weak, it was much healthier than it was at this time last year, and most of the main macroeconomic variables are on track. This bodes well for the second quarter, as the data is expected to show continued growth.
In the meantime, stocks are trading slightly below their all-time highs, which could provide a good entry point for new investors. On the economic calendar, we have China’s manufacturing PMI due on Tuesday, the Eurozone’s manufacturing PMI due on Thursday, and Japan’s services PMI due on Wednesday.