Trade data in focus
Friday’s external trade figures from the Statistics Department is likely to be the focus this week as it will help gauge the depth of the second quarter downturn.
In addition, Markit Malaysia Manufacturing PMI for June is expected to be announced on Wednesday.
ING Asia predicts that exports will drop 27% year-on-year in May. It also forecasts import in May to register a 23% decline year-on-year.
Exports in April fell by 23.8% to RM64.92bil, while imports decreased by 8% to RM68.42bil.
In April, Malaysia recorded a trade deficit of RM3.5bil, after 269 consecutive months of surplus on account of higher contraction in exports compared to imports.
The last trade deficit recorded by the country was in October 1997 at RM151.3mil.
PMIs
Purchasing manager indexes (PMIs) data will take prominence this week.
The PMI performance of regional trade powerhouses, including Japan, South Korea, Taiwan, Vietnam, Thailand and Singapore will provide insights into the flow of Asian trade during June.
According to ING, China’s PMIs remained the most market-sensitive of all – and the expectation of it staying above the 50 threshold implies improving business conditions which are at risk from renewed Covid-19 spread in Beijing and neighbouring provinces.IHS Markit concurred that China’s PMIs will be especially closely watched given its earlier relaxation of virus-related restrictions.
So far the data have shown encouraging strength, with business activity across manufacturing and services growing in May at the fastest rate since the start of 2011.
The data for China may, therefore, help gauge the extent to which early rebounds in activity from lockdowns might fade.
A plethora of data is due in China this week. The official National Bureau of Statistics (NBS) manufacturing and services purchasing managers indexes (PMI) are due on Tuesday. The Caixin manufacturing PMI for June is due out on Wednesday and the services PMI due out on Friday.
US employment, FOMC minutes
US data releases include the monthly employment report, which includes unemployment and non-farm payroll data. Some 2.5 million jobs were added in May with a further 3 million gain anticipated in June, according to the market consensus.
IHS Markit said while the jobless rate is expected to ease further from a post-war record 14.7% in April, it will inevitably remain elevated.
IHS Markit and ISM PMI surveys are also expected to be out this week.
The US Federal Open Market Committee Meeting (FOMC) minutes for the June 9-10 meeting will be released on July 1.
South Korea trade data
South Korea’s exports for June will be the first from the region to reveal the state of global demand this month, according to ING Asia.
It added that the easing of lockdowns in key markets should result in a smaller year-on-year fall. And, with weak exports and domestic spending, manufacturing growth is likely to remain negative as well.
According to UOB Global Economics and Markets Research, South Korea’s exports may contract by 6.4% year-on-year (from -23.7% in May) while imports will contract 11.6% year-on-year (from -15.9% in May). Trade surplus will widen to US$1.1bil from a US$900mil deficit in May.
Source The Star