Key economic releases, week commencing February 21st, 2022

21 Feb, 2022 | Week Ahead | 0 comments

  • Flash PMI numbers from UK, US and EU expected to show continued economic expansion
  • French Inflation and PPI readings to underline challenges that lie ahead
  • US Personal Spending set to show confident outlook

The week will start with flash PMI releases from both the UK and Eurozone for February being published on Monday. In both instances, manufacturing seems likely to outstrip the services prints, where the rising cost of living crisis will be taking a toll. That said, all readings are expected to come in comfortably above 50, with the downside risk being posed by any prints below this level, as that will illustrate economic contraction, something which is difficult for policymakers to manage alongside rising interest rates.

Although US PMI readings are usually released on the same day as their European counterparts, this week data from across the Atlantic will be delayed as a result of the Presidents’ Day holiday. As such on Tuesday look for the flash PMI readings out of Washington. Again there’s a normalisation expected here with manufacturing set to come in around the 55 level, whilst services is likely to be closer to 52, all comfortably clear of the 50 mark which is likely to reassure the market that the Fed can deliver those rate hikes in the months ahead.

On to Wednesday where the forward looking German Consumer Confidence data for March will be published. Since the start of the global health pandemic this number has only managed a marginally positive print on a few occasions and the downbeat sentiment seems likely to persist. A modest improvement on the February reading of -6.7 is expected, but inflationary pressures and stubbornly high COVID cases will be taking a toll.

After a relatively low-key Thursday, the week finishes with a flurry of releases. The parallel publication of French Inflation data for February and French PPI readings for January will make for a stark comparison. On an annualised basis, the former is expected to come in around the 3% mark, whilst the latter will be closer to 18%, suggesting that there’s a world of pain still to face the Eurozone’s second largest economy. Prices will have to rise whilst company profits will be squeezed as rising input costs take a toll – that’s nothing new, but the release of these data points simultaneously will underline the scale of the challenge that’s to come.

The UK Gfk Consumer Confidence reading for February is also out, but again the challenge of spiralling living costs will offset much of the upside seen as the country navigates its way out of the COVID pandemic. Having printed -19 in January – the lowest level in almost a year – a modest improvement is expected. The risk here would be failure to see any meaningful improvement, something which would arguably knock stocks and the Pound at the same time.

Finally, US Personal Income and Spending data for January is due. This pair of numbers can provide a useful proxy for consumer confidence, with spending higher than income suggesting a willingness to borrow. That wasn’t the case in December’s prints, but expectations are that a recovery will have been seen after Christmas, a combination which will again provide support to policy hawks at the Federal Reserve.

Article by Tony Cross
of Monk Communications

This article first appeared in Octo Members, the app-based private community for UK financial services professionals.

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