Fisher Investments recaps the biggest market, political and economic news from last week, including US Flash PMIs, UK inflation data, and eurozone and Japanese Q4 2020 GDP estimates.
In the US, February Markit Flash Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 58.5 and 58.9, respectively (values above 50 indicate expansion). Retail sales grew 5.3% m/m in January, beating expectations. January industrial production rose 0.9% m/m while manufacturing production increased 1.0% m/m—both ahead of estimates. With most S&P 500 companies having reported results, corporate earnings grew in Q4 2020 for the first time since 2019 driven, in part, by a stronger than expected economic rebound. For more commentary on corporate profits, please see our 2/18/2021 article, “The Earnings Slump Seems Over.”
In the eurozone, the February Markit Flash Manufacturing PMI rose to 57.7, above expectations, while the Flash Services PMI fell to 44.7, missing the consensus forecast. The second estimate of Q4 2020 GDP revised up slightly to a -0.6% q/q contraction, or -5.0% y/y. December industrial production fell -1.6% m/m and -0.8% y/y, missing expectations. In the UK, the February Markit/CIPS Flash Manufacturing and Services PMIs were 54.9 and 49.7, respectively—both better than forecast. January retail sales fell 5.9% y/y, more than anticipated. January core consumer prices (excluding food and energy) rose 1.4% y/y.
In Japan, the February Jibun Bank Flash Manufacturing PMI rose to 50.6 while the Flash Services PMI fell to 45.8. January core-core consumer prices (excluding fresh food and energy) increased 0.1% y/y. January exports rose 6.4% y/y while imports fell 9.5%—both missing estimates. The first estimate of Q4 2020 GDP beat expectations, showing a 3.0% q/q increase. While Japan’s Q4 2020 GDP grew the fastest among developed-world nations reporting thus far, consumer spending and gross private domestic demand are still down. Absent deep structural reform, we believe domestic demand probably remains lackluster. For more, please see our 2/16/2021 commentary, “Japan’s GDP and the Nikkei’s Milestone: Don’t Call It a Comeback.”
The Week Ahead
The US releases its second estimate of Q4 2020 GDP as well as January new home sales, durable goods orders and the Conference Board’s Leading Economic Index. The eurozone announces January inflation and M3 money supply. The UK posts unemployment for the three months ending in December. Japan reports January trade figures, industrial production and retail sales.
Source for all data cited is FactSet. This update constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice. No assurances are made we will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Global equities are represented by the MSCI World Index. The MSCI World Index measures the performance of selected stocks in 23 developed countries and is presented net of dividend withholding taxes and uses the maximum rate applicable to non-resident institutional investors who do not benefit from double taxation treaties. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.