Week Ahead Economic Preview: Week of 14 August 2023

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Fed minutes, RBNZ meeting and a busy economic calendar

The week ahead is packed with central bank updates, including Fed minutes and monetary policy meetings in New Zealand and the Philippines. Furthermore, a series of economic releases will be anticipated including GDP data from the eurozone, Japan and other APAC economies. Both the US and mainland China will meanwhile release retail sales and industrial production data, with the former also updating housing market figures. Other data to watch includes labour market and inflation reports from the UK.

The latest S&P Global Investment Manager Index survey unveiled that concerns over valuation heightened in August among US equity investors. To a large extent, this stemmed from both an elevated US market and worries over the outlook amid lingering central bank policy and macroeconomic risks. Next week's releases will therefore provide further insights as to whether these equity market woes deserve greater attention or otherwise.

The Fed minutes from the July Federal Open Market Committee (FOMC) meeting will notably be scrutinised next week with the market holding mixed views on whether more hikes may be expected for the rest of 2023. However, with the Fed's clear data-dependent view towards shifting rates in the coming meetings, the series of economic releases such as retail sales, industrial production and housing figures will be the highlights as well. July's US PMI data revealed continued, albeit slower, growth for services while manufacturing output expanded marginally, which hints at better readings for the two gauges.

Beyond the US, the UK releases both labour market and inflation reports. The KPMG and REC report on jobs in the UK alluded to slowing hiring momentum in July while PMI data showed inflationary pressures continued to dissipate. Official confirmations will be sought with the economic releases next week, and could lead to further moderation in rate hike speculations.

Finally, in APAC, the RBNZ and BSP meet though little surprises are anticipated. Japan's GDP and inflation data may capture the focus instead, alongside mainland China activity readings after Caixin PMI data showed composite output expanded at the slowest rate for six months.

Broad-based slowdown affects hiring

July's PMI data revealed that the latest slowdown in global economic growth became more broad-based at the start of the second half of 2023. While emerging markets were showing more resilience relative to developed economies earlier, both had since seen the pace of expansion ease from peaks in May.

As a result, the labour market which significantly tightened since the pandemic have been showing more slack into the latter half of 2023. Official UK employment numbers will be assessed next week after UK jobs growth hit a four-month low on the PMI front. Meanwhile broader jobs developments remain in focus amid sustained waning of post-pandemic demand (see special report).

Key diary events

Monday 14 Aug
Thailand Market Holiday
Germany Wholesale Prices (Jul)
India WPI and CPI (Jul)
United States Consumer Inflation Expectations (Jul)

Tuesday 15 Aug
India, South Korea Market Holiday
Japan GDP (Q2, prelim)
South Korea Trade (Jul)
Australia RBA Meeting Minutes (Aug)
Australia Wage Price Index (Q2)
China (Mainland) Industrial Production (Jul)
China (Mainland) Retail Sales (Jul)
China (Mainland) Unemployment (Jul)
China (Mainland) Fixed Asset Investment (Jul)
Thailand GDP (Q2)
Indonesia Trade (Jul)
Japan Industrial Production (Jun, final)
Japan Capacity Utilisation (Jun)
United Kingdom Labour Market Report (Jun)
Germany ZEW Economic Sentiment (Aug)
India Trade (Jul)
Canada Inflation (Jul)
Canada Manufacturing Sales (Jun, final)
United States Retail Sales (Jul)
United States Import and Export Prices (Jul)
United States Business Inventories (Jun)
United States NAHB Housing Market Index (Aug)

Wednesday 16 Aug
New Zealand RBNZ Interest Rate Decision
China (Mainland) House Price Index (Jul)
United Kingdom Inflation (Jun)
United Kingdom Retail Sales (Jul)
Eurozone Industrial Production (Jun)
Eurozone GDP (Q2, prelim)
Canada Housing Starts (Jul)
United States Building Permits and Housing Starts (Jul)
United States Industrial Production (Jul)

Thursday 17 Aug
Indonesia Market Holiday
Japan Trade and Machinery Orders (Jul)
Singapore Non-oil Domestic Exports (Jul)
Australia Employment (Jul)
Philippines BSP Interest Rate Decision
United States Fed FOMC Minutes (Jul)

Friday 18 Aug
Japan Inflation Rate (Jul)
Malaysia GDP (Q2)
United Kingdom Retail Sales (Jul)
Taiwan GDP (Q2, final)
Eurozone Inflation (Jul, final)
Canada PPI (Jul)

* Press releases of indices produced by S&P Global and relevant sponsors can be found here.

What to watch

Americas: FOMC minutes, US retail sales, industrial production, housing starts and building permits data, Canada CPI

Minutes from the July Federal Open Market Committee (FOMC) meeting will be due next week for insights into the Fed's thoughts in what was widely regarded to be the last, if not almost the last meeting that the Fed hikes rates for the year. This is according to indications from the CME FedWatch tool, currently pointing to almost two-thirds chance of the Fed holding steady by year end.

Concurrently, a series of economic data releases including industrial production and retail sales figures will be closely watched for updates of US economic conditions. Better readings for both gauges are expected in July according to consensus, including industrial production. This is in line with indications from the latest S&P Global US Manufacturing PMI which showed the decline in manufacturing performance softening over July. Further watch for US housing data and CPI figures from Canada.

Europe: Eurozone Q2 GDP, CPI, UK employment and inflation reports, German ZEW survey

The eurozone releases Q2 GDP and July CPI next Wednesday and Friday respectively, though these are final numbers.

Instead, watch for UK releases on both employment and inflation fronts next week. The earliest signals from the S&P Global / CIPS UK PMI reflected easing employment growth and inflationary pressures in July on the back of rising interest rates, thereby preluding lower readings for the abovementioned gauges.

Asia-Pacific: RBNZ, BSP meetings, Japan GDP, inflation, China industrial production and retail sales, India CPI

In APAC, central bank meetings in New Zealand and the Philippines unfold, though the focus may well be on data releases from mainland China as well as Japan's growth and inflation numbers next week.

A weak start to the third quarter for mainland China was noted as the PMI signalled divergent sector growth and inflation trends. Meanwhile, Japan's expansion rose further into Q2 according to PMI data as we await the official GDP release.

Special reports

Global Upturn Loses Further Momentum at Start of Third Quarter, Hiring Spree Cools - Chris Williamson

Taiwan Economy Rebounds in Second Quarter of 2023 - Rajiv Biswas

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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.

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