MNI GLOBAL MORNING BRIEFING: German PPI & EZ/UK PMIs

The week in data kicks off with German factory-gate inflation data, followed by February flash PMIs for France, Germany, the Eurozone and the UK.

German Producer Prices to Inch Down (0700 GMT)

Analysts see a modest slowdown in German factory gate inflation for January, seen inching down to 24.0% y/y from the surge of 24.4% y/y in December. Monthly PPI growth is seen weakening more substantially to +1.4% in January, following December’s jump to 5.0% m/m.

German factory-gate inflation hit an all-time high of +24.2% y/y in December, jumping five points from the month prior and outpacing expectations. Surging energy costs remain the key inflationary pressure in German PPI, however, core PPI remained elevated at 10.4% y/y due to high input goods inflation.

Flash Manufacturing/Services/Composite PMIs

The consensus anticipates overarching trends of marginal declines in manufacturing contrasted with positive growth in services across regions in the flash February PMI releases. Overarching service growth is expected to boost composite readings. All are seen remaining in expansive territory above the no-change mark of 50.

The persistence of supply chain disruptions and inflationary pressures of supply bottlenecks remain a key topic across regions currently. As such, markets will be watching for clues on how the situation is developing.

France (0815 GMT): France will kick off the PMI round this morning, with services expected to strengthen to 53.5 in February from 53.1 last month. Manufacturing is expected to stabilise at 55.5, with growth expectations unchanged from January.

Germany (0830 GMT): Germany’s manufacturing PMI is seen softening to 59.4 in February, down from 59.8 in January which saw a slight recovery from the September-December slump. Services are expected to recover for the second consecutive month to 54.0 from 52.2, on the back of easing Covid cases. Input cost inflation continues to be problematic in the service sector.

Eurozone (0900 GMT): Eurozone manufacturing is expected to tick down to 58.6 in February, from the five-month high of 58.7 last month. Services are projected to grow 1.2 points to 52.3 this month, recovering from January which saw the weakest expansion since April 2021.

UK (0930 GMT): Consensus is forecasting a slowdown of manufacturing to 57.0 in February, down from 57.3 and an almost two-point boost to services up to 56.0, from 54.1 in January. The UK services PMI saw prices charged growth hit a survey record (over 25-year) high last month as firms passed on higher energy, transport and labour costs. Demand rebounded following an Omicron-induced slowdown.

Today there is one key policymaker appearance on the schedule; Fed Governor Bowman speaking at the American Bankers Association Conference. A link to the event is in the calendar below.

Date	GMT/Local	Impact	Flag	Country	Event
21/02/2022	0700/0800	**		DE	PPI
21/02/2022	0815/0915	**		FR	IHS Markit Services PMI (p)
21/02/2022	0815/0915	**		FR	IHS Markit Manufacturing PMI (p)
21/02/2022	0830/0930	**		DE	IHS Markit Services PMI (p)
21/02/2022	0830/0930	**		DE	IHS Markit Manufacturing PMI (p)
21/02/2022	0830/0930			SE	Riksbank minutes Feb 3 meet
21/02/2022	0900/1000	**		EU	IHS Markit Services PMI (p)
21/02/2022	0900/1000	**		EU	IHS Markit Manufacturing PMI (p)
21/02/2022	0900/1000	**		EU	IHS Markit Composite PMI (p)
21/02/2022	0930/0930	***		UK	IHS Markit Manufacturing PMI (flash)
21/02/2022	0930/0930	***		UK	IHS Markit Services PMI (flash)
21/02/2022	0930/0930	***		UK	IHS Markit Composite PMI (flash)
21/02/2022	1615/1115			US	Fed Governor Michelle Bowman