Thomas Watts, Investment Analyst, abrdn MPS, comments on the economic data releases this week;
The upcoming weeks’ worth of economic data, tells us just what people are making, more specifically in the factories and assembly lines of the world.
Starting in the workshop of the world, China, today gives us the nation’s latest Purchasing Manager Index (PMI) reading for the Manufacturing sector. PMI data is an important tool in the economist’s kit bag as it acts as a leading indicator of economic health, businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy. After the huge amounts of economic stimulus announced for the Chinese economy last week, the data should take on an even more important role now when assessing the strength of China’s output.
In the same vein, later on in the week we get Construction PMI figures for the UK. With one of the key parts of Labour’s manifesto being to loosen building regulations and to construct more houses, it will be interesting to see where the sector currently sits. The data itself will come from a survey of about 150 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
The second half of the week takes on a distinctly US labour themed feel, with Job openings data followed by Non-Farm Payroll (NFP) figures. Both are important in their own way and together, help us build a comprehensive picture of how the employment landscape in the US is shaping up. NFPs are highly regarded by the US Federal Reserve, we should expect heightened market volatility come the end of the week during its release. The data itself will be accompanied by Average Hourly Earnings, allowing us to gauge future inflation expectations as the more consumers earn, the more they tend to spend. It all combines to be a vital piece of data for the Federal Reserve and should take on added significance with the labour market having shown further signs of deterioration during the previous months, flashing potential recession warnings.”
