Weekly Wrap-Up

Last Week In Markets: May 17 - May 21 2021

Fisher Investments recaps the biggest market, political and economic news from last week, including US LEI readings, eurozone and UK PMIs and Japan's first Q1 2021 GDP estimate.

In the US, the May Markit Flash Manufacturing and Services Purchasing Managers’ Indexes (PMIs) were 61.5 and 70.1, respectively—both above expectations. PMI readings above 50 indicate expansion. The Conference Board’s Leading Economic Index (LEI) increased 1.6% m/m in April, surpassing forecasts. Initial jobless claims for the week ending May 15 were 444,000—the lowest reading in 14 months.

In the eurozone, the May Markit Flash Manufacturing PMI fell slightly to 62.8, better than expected, while the Markit Flash Services PMI rose to 55.1, beating the consensus forecast. The second estimate of Q1 2021 GDP was unchanged from the first estimate—reporting a 0.6% q/q contraction (-1.8% y/y). April core consumer prices (excluding energy, food, alcohol and tobacco) rose 0.7% y/y. In the UK, the May Markit/CIPS Flash Manufacturing and Services PMIs were 66.1 and 61.8, respectively. Unemployment for the three months ending in March fell to 4.8%, beating expectations. April retail sales rose 9.2% m/m and 42.4% y/y, more than anticipated. April core consumer prices (excluding food and energy) rose 1.3% y/y. The big jump in April’s headline inflation rate to 1.5% y/y sparked concern, but similar to the US April inflation figures, we believe the sharp increase is likely skewed by the comparison to low price levels a year ago and temporary supply and demand mismatches as the economy reopens.

In Japan, the May Jibun Bank Flash Manufacturing and Services PMIs fell to 52.5 and 45.7, respectively. The first estimate of Q1 2021 GDP missed expectations, declining 1.3% q/q and 1.9% y/y. April core-core consumer prices (excluding fresh food and energy) decreased 0.1% y/y. April exports rose 38.0% y/y while imports rose 12.8% y/y—both beating estimates. March industrial production rose 1.7% m/m and 3.4% y/y. In China, April industrial production rose 9.8% y/y, missing forecasts. April retail sales rose 17.7% y/y, lower than the consensus estimate. The April unemployment rate decreased to 5.1%.

The Week Ahead:

The US reports April new home sales, durable goods orders and the second estimate of Q1 2021 GDP. Japan releases the April unemployment rate and final April trade and LEI figures.