Thailand
Malaysia: The Week Ahead – Manufacturing index, PMIs, Inflation, RBA,
Manufacturing Index
IHS Markit is expected to release the manufacturing Purchasing Managers’ Index (PMI) during this holiday-shortened week.
Analysts expect the PMI to rise to 53 points in January 2022.
The manufacturing PMI is expected to be 52 points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations.
The headline manufacturing PMI rose to 52.8 in December 2021 from 52.3 in November.
Meanwhile, trading on Bursa Malaysia will be opened for the morning session only today, on the eve of Chinese New Year (CNY).
The exchange and all its subsidiaries will be closed on Feb 1-2 in conjunction with the CNY and Federal Territory Day holidays.
PMIs
WORLDWIDE manufacturing and services PMIs will be watched intently this week for indications of how the global economy has fared at the start of 2022.
IHS Markit said the January flash PMIs alluded to a sharp slowing in developed world growth, with United States growth notably slipping to an 18-month low.
Japan and Australia, meanwhile, fell into their third economic downturns of the pandemic as the Omicron wave hit, though the UK displayed some encouraging economic resilience in the face of the Omicron variant’s spread, it said.
Inflation reports
INDONESIA and the Philippines are expected to announce their inflation figures this week.
Indonesia will also be releasing its gross domestic product (GDP) for the fourth quarter of 2021.
Inflation will likely pick up this year, with base effects and surging global crude oil prices likely to play a factor, according to ING.
In the Philippines, ING expects price pressures to extend into 2022, given the persistent struggles to quell African swine fever coupled with the likely higher food prices due to crop damage from a recent super-typhoon.
It added that the improving growth dynamics for both Indonesia and the Philippines also suggested that some demand-side pressure will begin to build in 2022.
Inflation dynamics, coupled with a hawkish Fed, could convince erstwhile dovish central banks to consider policy normalisation sooner rather than later.
RBA monetary policy
ALL 10 economists polled in a Bloomberg survey expect the Reserve Bank of Australia (RBA) to keep the cash rate target at its record low of 0.1%.
UOB Global Economics & Market Research said the February meeting would take on a greater significance, given the scheduled review of the bond-buying programme.
RBA governor Philip Lowe highlighted three criteria, the first being the actions of other central banks, the liquidity in the bond market and the labour market, all seemed to be met and support the cessation of the purchase programme.
The latest surge in inflation prints adds to the view of the RBA ending quantitative easing in February.
This is why UOB now thinks the RBA would decide to cease bond purchases altogether at the February meeting.
As for the cash rate target, UOB believed wage growth would be a crucial factor to the policy outlook, going forward. In this regard, UOB said the RBA is likely to continue to wait until wages growth is closer to 3%.
It is still looking for rate hikes in the fourth quarter of 2023, though it now flags the potential risk for earlier hikes.
Source: https://www.thestar.com.my/business/business-news/2022/01/31/the-week-ahead—manufacturing-index-pmis-inflation-rba