On Monday 2nd: Manufacturing PMIs are due Japan, Spain, Switzerland, Italy, France, Germany, the EU, the UK, Canada, and the US, and the EU Unemployment Rate is due.
On Tuesday 3rd: The RBA meets on Monetary Policy, and US JOLTS Job Openings are released.
On Wednesday 4th: The RBNZ meets on Monetary Policy, the US ADP Employment change is due, and Services PMIs are due for Japan, Spain, Italy, France, Germany, the EU, the UK, and the US.
On Thursday 5th: Trade Balances are due for Australia, Germany, and the US among others, while Canada's Ivey Purchasing Managers Index is also due.
On Friday 6th: Employment data is due from both the US and Canada, including US Nonfarm Payrolls.
Weekly Outlook
The week ahead of the official start of another earnings season will be fairly subdued for investors but will be dominated mostly by US employment data ahead of the next Fed meeting which takes place at the end of the month. Employment figures are finally seeming to be affected by the tightening cycle imposed by the Fed, and since wages and salaries are a significant input cost for businesses, a decrease in these numbers generally results in lesser prices for goods and services, ultimately causing the inflation rate to fall.
This week the RBA and RBNZ will also ponder whether interest rates are restrictive enough to bring inflation back to target quickly enough without crashing their economies. Both central banks are waiting and watching as fresh pricing data comes in, hoping the peak for interest rates has already been reached after pausing the monetary tightening cycle a few times so far this year.
Monday 2nd of October
A number of Manufacturing PMIs are due throughout the day for September from countries such as Japan, Spain, Switzerland, Italy, France, Germany, the EU, the UK, Canada, and the US. PMIs for the manufacturing sector across the board have been below average, sitting below the level of 50, which indicates contraction in the industry. In particular, the US’s ISM Manufacturing PMI rose to 47.6 from 46.4 last month, beating the market estimate of 47.0. However, this figure nonetheless showed industrial economic activity had declined for the ninth consecutive month and forecasts are only for a slight improvement this month.
The seasonally adjusted Unemployment Rate for the Euro Area remained at a record low of 6.4% in July, which was in line with market expectations. A year earlier, the figure was substantially higher at 6.7% and forecasts for August put the figure rising again to 6.5% when the new data is released at 9:00 AM GMT.
Tuesday 3rd of October
The Reserve Bank of Australia is due to meet on Monetary Policy this week, with the decision statement released Tuesday at 3:30 AM GMT. The RBA held its cash rate at 4.1% at Governor Philip Lowe's final meeting, prolonging the rate pause for the third month as expected.
The board said inflation has peaked but would remain high for some time and more monetary tightening may be required to return inflation to the goal range of 2 to 3% in a reasonable period. However, households are now worried about another rate rise before the end of the year as annual inflation increased to 5.2% in August from 4.9% in July due to rising fuel prices, rent, and insurance costs.
US JOLTS Job openings are due at 2:00 PM GMT today. Vacancies fell 338 thousand to 8.827 million in July, the lowest level since March 2021 and below the market estimates. After months of Fed monetary policy tightening, job vacancies may again fall for the fourth month in a row to around 8.5 million for August, signaling that the labor market is consistently cooling.
Wednesday 4th of October
The Reserve Bank of New Zealand meets on Monetary Policy this week, with their decision statement due at 1:00 AM GMT. In August, the RBNZ maintained the official cash rate at 5.5%, prolonging the rate pause for the second month and matching market expectations.
After 525 basis points of rate rises since October 2021, the board highlighted that the current level of interest rates was restrictive enough, however, inflation remains far too high at 6% for the second quarter with new data due mid-next month. Analysts see a 25 basis points bump is likely to be passed from the meeting this week.
The ADP Employment Change is due at 12:15 PM GMT this afternoon, preceding the official government employment figures on Friday. Despite market estimates of a 195 thousand increase and a revised 371 thousand increase in July, private firms in the US employed 177 thousand people in August, the fewest in five months. Forecasts are for around 150 thousand additional jobs for September.
A number of Services PMIs are due throughout the day for September from countries such as Japan, Spain, Italy, France, Germany, the EU, the UK, and the US. PMIs for the Services sector have generally been stronger than manufacturing, with many sitting above or around the level of 50, which indicates growth in the industry.
For example, the US ISM Services PMI surprisingly increased to 54.5 in August from 52.7 in July, signifying the highest growth in the services sector in six months. However, expectations are for a slight drop for this month to 54.
Thursday 5th of October
Australia's trade surplus decreased to AUD 8.04 billion in July from a downwardly revised AUD 10.27 billion in June. As exports decreased and imports increased, the trade surplus decreased to its lowest level since February 2022. When the latest report is released at 12:30 AM GMT, forecasts are for a further dip to around AUD 7.5 billion.
Germany's trade balance is also due today at 6:00 AM GMT. The country’s July surplus was EUR 15.9 billion, down from EUR 18.7 billion in June, when it had seen its greatest increase since January 2021. Expectations are for a greater surplus for August to the tune of around EUR 16.8 billion.
The US Trade Balance is due at 12:30 PM GMT today. Despite market expectations of a USD $68 billion gap, the deficit in July only increased to $65 billion from a downwardly revised $63.7 billion in June. A slight increase to $65.1 is expected for August.
Canada's Ivey Purchasing Managers Index, due at 2:00 PM GMT, rose to 53.5 in August, from 48.6 in July, above market expectations of around 49.2. After a minor decline in the previous month, the most recent data showed that Canada's economy is once again expanding. However, forecasts are for another dip below 50 for September so the positivity may be short-lived.
Friday 6th of October
A collection of employment data is due from Canada and the US today from 12:30 PM GMT. In Canada, the unemployment rate was 5.5% in August, steady from the previous month and slightly below market expectations.
Although the numbers show some weakening in the labor market since last year, the rate is still much lower than it was before the pandemic, and the labor market will still be historically tight even if it increases to the forecast level of 5.6% this month. The workforce is expected to lose around 30 thousand workers for September after adding just under 40 thousand jobs in August.
In the US, the economy created 187 thousand jobs in August, above market predictions of 170 thousand and a downwardly revised 157 thousand in July. In spite of this, this was the third consecutive month in which job increases were below the 200 thousand level, suggesting a progressive softening of labor market conditions.
The US Bureau of Labour Statistics is expected to report growth of around 150 thousand positions created for September, while the annualized Average Hourly Earnings are projected to drop from 4.3% to 4.1% in the same month.
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