Macroeconomic & Geopolitical

As COVID Cases Fade, Services Ready for Upgrade

February 2022 – 3 min read

January U.S. retail sales surprised to the upside, rising 3.8% M/M. The Omicron wave temporarily halted the shift in consumer spending from goods to services, as at-home sectors gained. Meanwhile, restaurant sales fell for a second-consecutive month.

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Arrows indicate consensus forecast compared to the previous period. Local dates of release. 

U.S.
  • We will watch the February Markit flash PMIs to gauge the rebound in activity following the Omicron wave.
  • The core PCE deflator—the Fed’s preferred measure of inflation—is expected to increase on a Y/Y basis in January following elevated CPI and PPI data.
Europe
  • EA and U.K. PMIs for February will show whether private sector activity is recovering from Omicron restrictions.
  • EA consumer confidence fell in January amid Omicron, to the lowest level since March 2021. We are watching whether there are signs of recovery this month as restrictions lift.
Asia Pacific
  • The PBOC is expected to keep loan prime rates steady. Nevertheless, the Q4 Monetary Policy Report reiterated the bank’s easing bias and supportive monetary policy stance, suggesting more dovish policy can be expected in the months ahead.
  • Japan PMIs could show the lingering impact of infections remaining elevated in February.

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Kathryn Asher

Associate Director, Economist

Agnès Belaisch

Managing Director, Chief European Strategist

Matteo Cominetta

Director, Economist

Bonnie David

Assistant

Christian Floro

Associate Director

Anna Hanley-Walsh

Analyst

Christopher Smart, PhD, CFA

Chief Global Strategist & Head of the Barings Investment Institute

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