Week Ahead

It will be a busy week, with the US jobs report and worldwide manufacturing and services PMIs providing an update on the economic recovery as well as supply constraints and price pressures. Other important releases include GDP figures for India, Brazil, Australia and Canada, monetary policy decisions from the RBA and the RBI, and inflation for the Euro Area.

In the US, investors’ focus turns to the May’s jobs report, which will probably show a payroll increase of 650 thousand, after a smaller-than-expected 266 thousand gain in April; while the unemployment rate is seen falling below the 6 percent mark for the first time since March 2020, when the pandemic first hit the labor market. Meanwhile, the ISM PMI surveys should signal solid manufacturing and service growth rates during May, on the back of the country’s re-opening efforts, the ongoing government support and one of the world’s most successful vaccination campaigns. Other notable publications are factory orders; construction spending; ADP employment change; IBD/TIPP Economic Optimism; Dallas Fed Manufacturing Index; and the final readings of first-quarter labor productivity and Markit PMI surveys. US stock markets will be closed on Monday for Memorial Day.

Elsewhere in America, key data to follow include Canada first-quarter GDP growth and current account, employment figures, and PMI surveys from both Markit and Ivey Business School; Mexico business and consumer morale, and Markit Manufacturing PMI; and Brazil first-quarter GDP, industrial output, foreign trade and Markit PMI numbers.

In the UK, final Markit PMIs are expected to confirm Britain’s private sector businesses had their best month for two decades in May, buoyed by record growth across the manufacturing sector and the fastest output growth since October 2013 in the service sector as a vaccine-driven reopening of the economy gets into gear. Still, flash data showed cost pressures were the strongest for nearly thirteen years. Meantime, preliminary figures are expected to show the UK construction growth remains around 6-1/2-year highs. Bank of England’s monetary indicators, Nationwide housing prices and new car sales will also be in the spotlight.

Elsewhere in Europe, the preliminary print of Eurozone inflation for May is expected to show a quickening of price pressures with the headline figure likely hitting ECB’s target of just below 2%, although the central bank attributes it mainly to last year’s low base effect. Other major European countries will also release flash inflation data, including Germany, Italy and Spain. Meantime, investors will also keep an eye on the final Markit PMI surveys for the Euro Area, Germany and France while Italy and Spain will publish their preliminary estimates. Other key economic data include: the Eurozone unemployment rate, retail sales and producer prices; Germany jobless data and retail trade; Switzerland Q1 GDP figures, manufacturing PMI and retail sales; and Turkey Q1 GDP and consumer prices data.

In China, traders will turn their attention to May’s PMI updates from both the NBS and Caixin, with forecasts pointing to a steady factory activity growth as the country continues its recovery from the coronavirus hit. In Japan, important data to watch for include industrial production, retail sales, consumer confidence, household spending, housing starts, and the final estimates of Jibun Bank PMIs.

The Reserve Bank of Australia and the Reserve Bank of India will hold their monetary policy meetings, but no changes are expected. On the economic data front, important releases for Australia include first-quarter GDP, current account, Ai Group manufacturing and construction indexes, trade balance, building permits, and home loans; while in India, January-March GDP data, foreign trade and Markit PMIs will be in the spotlight.