Upcoming Events
Next week promises to be eventful with several key economic indicators and reports scheduled for release:
Monday: We kick off with the Bank of Japan’s Summary of Opinions, followed by Australia’s Retail Sales figures. China will reveal its Caixin Manufacturing PMI, while Switzerland and the Eurozone will announce their respective Manufacturing PMIs. We’ll also get a peek at Eurozone’s Flash CPI, Canada’s Manufacturing PMI, and the US ISM Manufacturing PMI.
Tuesday: In the spotlight will be the US Job Openings data and New Zealand’s Employment report.
Wednesday: Japan will release its Average Cash Earnings data, and we’ll get another glimpse at China’s economic activity through its Caixin Services PMI. The Eurozone PPI, US ADP, Canada’s Services PMI, and US ISM Services PMI will also be significant.
Thursday: Switzerland’s Unemployment Rate, the Eurozone Retail Sales, and the Bank of England’s Policy Decision are on deck. Additionally, we’ll be keeping an eye on the latest US Jobless Claims.
Friday: We’ll wrap up the week with reports from Canada on employment and from the US, including the Non-Farm Payrolls and University of Michigan Consumer Sentiment.
Monday
Looking ahead to Monday, the Eurozone CPI is projected at 2.4% year-on-year, consistent with the previous figure, while the Core CPI year-on-year might slightly dip to 2.6% from 2.7%. Recent data from France and Germany suggest a softening in inflation, fueling expectations for rate cuts by the European Central Bank (ECB). Markets are betting on at least three rate cuts by year-end, especially if there are more aggressive tariff moves from the Trump administration.
Turning our attention to the United States, the ISM Manufacturing PMI is projected to edge up to 49.8 from 49.3. Positive commentary from S&P Global, indicating optimism due to policy shifts under the new administration, suggests a manufacturing sector looking forward to future growth. Hopes are high that the policies of the Trump administration could further bolster economic momentum.
Tuesday
On Tuesday, US Job Openings are anticipated to be around 8.000 million, slightly down from 8.098 million. The previous report exceeded expectations, bolstered by increased confidence and business activity following interest rate cuts and Trump’s electoral win. While the labor market shows strength, low quits and hiring rates imply job stability, though it might be tougher to land a new position.
In New Zealand, the employment data for the fourth quarter is expected to show a 0.2% contraction, better than the previous 0.5% decrease. However, the Unemployment Rate may rise to 5.1% from 4.8%. With inflation back in the target band, the Reserve Bank of New Zealand is now shifting focus towards growth, similar to Canada’s central bank. Markets are anticipating a further 50 basis points cut in the upcoming meeting, with total easing of 120 basis points by the end of the year.
Wednesday
Midweek, the Japanese Average Cash Earnings are expected to jump to 3.8% year-on-year from 3.0%. The recent 25 basis points rate hike by the Bank of Japan indicates its confidence in stronger wage growth. While official guidance remains vague, continued data improvement could prompt market speculation on further rate hikes.
In the US, the ADP is forecasted at 150,000 jobs, up from 122,000. Though not a precise indicator for the Non-Farm Payrolls, it signals steady job creation. It’s anticipated to be less market-moving, given prior interest rate expectation adjustments and the focus now on easing inflation.
Similarly, the ISM Services PMI is anticipated to tick slightly up to 54.2 from 54.1. Despite a significant miss in forecasts for the S&P Global Services PMI, sustained confidence suggests any slowdown in output might be temporary. Encouragingly, job creation is at its highest rate in over two years.
Thursday
On Thursday, the Bank of England is expected to cut interest rates by 25 basis points, bringing the Bank Rate down to 4.5%, reflecting a 7-2 vote split. The last decision was more dovish than anticipated, with a greater rate cut bias among policymakers. Despite recent upbeat UK PMI readings, S&P Global cautioned about potential stagflation risks, noting employment cuts due to declining sales and renewed price pressures.
US Jobless Claims remain a critical weekly economic indicator, reflecting immediate labor market conditions. Initial claims are forecasted at 215,000 compared to the prior 207,000. Though there’s no consensus for Continuing Claims yet, they’ve recently shown a slight decrease.
Friday
As the week closes, Canada’s jobs report is expected to reveal 25,000 new jobs in January, down from December’s 90.9K, with the Unemployment Rate rising slightly to 6.8% from 6.7%. December’s robust report was coupled with easing wage growth, suggesting gradual improvement in Canada’s economy, though potential US tariff threats loom over the CAD’s strength.
The US Non-Farm Payrolls are projected to add 170,000 jobs in January, a drop from December’s 256,000, with the Unemployment Rate holding steady at 4.1%. Average Hourly Earnings year-on-year are anticipated at 3.8%, a slight decrease from 3.9%. The previous strong report prompted a hawkish revision in rate expectations—a stance that’s softened following favorable US inflation data. Currently, the Fed is chiefly focused on inflation, with the labor market remaining robust without exerting upward pressure on inflation. Upcoming data hints at another solid employment report.
