The US jobs report due out on Friday is expected to reveal that employers increased payrolls by about 170,000 in August while maintaining a record low unemployment rate of 3.5%. Since the beginning of 2021, the average growth in employment during the last three months has been the smallest.
Fed Chair Jerome Powell stated Friday at the Kansas City Fed’s annual conference in Jackson Hole, Wyoming, that lowering inflation to 2% is anticipated to necessitate looser labour market conditions and a period of below-trend economic growth.
Powell Signals Fed Will Raise Rates If Needed, Keep Them High for more information.
Other labour market indicators are anticipated to reveal fewer job vacancies in July than a month earlier, indicating that the supply and demand of labour are becoming more evenly balanced. This might aid in limiting wage pressures and, eventually, inflation.
The rebalance has reduced wage pressures. Powell stated at Jackson Hole that wage growth across a variety of indicators “continues to decelerate, albeit gradually.
The personal consumption expenditures price index without food and energy will provide the Fed with a new reading on inflation on Thursday. The median projection is that the underlying inflation measure will rise by 0.2% for the second consecutive month in July, which would be the weakest back-to-back increase since the end of 2020.
According to Bloomberg Economics
One of Powell’s more intriguing arguments in his address in Jackson Hole was that he believes the Phillips Curve may have steepened: ‘There is evidence that inflation has become more responsive to labor-market tightness than was the case in former decades.’ This notion will be supported by nonfarm payrolls, which include average hourly earnings, and JOLTS statistics, with wage growth declining swiftly with only a small weakening in the labour market.
The eurozone’s August inflation figures will be a key topic elsewhere, while China’s PMI statistics are expected to confirm that the country’s economy is deteriorating rapidly.
For information on recent events, click here. Our summary of upcoming events in the global economy is provided below.
US and Canadian economies
On the calendar are updates on personal income and expenditure, consumer confidence, US jobs, PCE pricing data, as well as the first revision to the second-quarter GDP.
If the economy in Canada is slowing down enough for the Bank of Canada to hold rates stable the next week, it will be revealed by the second quarter GDP. According to preliminary data, growth is expected to expand at an annualised rate of 1%, which is less than the first quarter’s 3.1% growth.
See Bloomberg Economics’ complete Week Ahead for the US for more information.
Asia
In order to assess the most recent level of uncertainty in the second-largest economy in the world and its ramifications for the rest of the globe, investors will be monitoring China’s PMI data on Thursday.
According to data released on Sunday, China’s industrial profits declined less in July, but the industry is still under threat from the economy’s sluggish recovery and deflation threats.
Additionally, South Korea, Thailand, and Vietnam are anticipated to release trade data in a another pulse check on the state of world trade.
The Indian economy is expected to have grown at the quickest rate in a year in the second quarter, according to figures due on Thursday, driven by robust service sector growth and a rebound in manufacturing.
The state of both domestic and international demand in Japan should be reflected in a wide range of data, from employment to industrial production. Naoki Tamura and Toyoaki Nakamura, two board members of the Bank of Japan, give a midweek speech in response to the decision last month to essentially widen the 10-year yield range, a move that shook markets around the world.
The latest Australian consumer price statistics will be released on Wednesday, and Michele Bullock, the new governor of the Reserve Bank of Australia, will deliver her first address as governor after being appointed to the position.
Read Bloomberg Economics’ whole Week Ahead for Asia for more information.
Asia, Europe, and Africa
Before the highly anticipated European Central Bank rate decision in September, inflation estimates for the euro-area will give a crucial data point.
It’s possible that the euro area’s underlying inflation just slightly decreased, which might support the case for one more rate hike.
Governing Council hawks Joachim Nagel and Robert Holzmann spoke in the Austrian Alps to start the week before those data on Thursday. After the inflation figures, Vice President Luis de Guindos and Executive Board member Isabel Schnabel give a speech. The July rate decision explanation and the most recent set of confidence indicators for the eurozone are also due.
Fresh British housing data will probably show how the Bank of England’s rate aggression is still having an impact further north.
In the meantime, Tuesday’s GDP figures for Sweden are anticipated to reveal that the economy shrank in the second quarter, which will probably signal the beginning of a significant recession.
Hungary’s central bank is prepared to extend its programme of monetary easing in Eastern Europe, taking another percentage point off the highest key rate in the European Union as disinflation takes hold. A reduction in the outlook from stable to negative is a possibility when Moody’s examines the nation’s credit rating later this week.
On Thursday, it’s expected that Polish inflation will continue to fall down.
Tuesday will see the release of Turkey’s June trade balance. Investors will be looking for indications of whether the weakening of the lira, which occurred one month after President Recep Tayyip Erdogan’s reelection, decreased imports and benefited exporters.
The country will release its second-quarter GDP figure two days later. Investors want to know if the government’s increased expenditure in the run-up to the election helped the economy thrive.
The Kenyan government will provide yearly inflation figures for August for the first time since a court lifted the moratorium on new taxes, pending a ruling on the issue. The inflation rate returned to its goal range of 2.5% to 7.5% in July, three months sooner than anticipated. The central bank will closely watch the data to determine the effects of the levies on inflation.
The South African Reserve Bank will begin its two-day yearly conference on Thursday as well. Lesetja Kganyago, its governor, Raphael Bostic, president of the Atlanta Federal Reserve Bank, and Gita Gopinath, the IMF’s first deputy managing director, are among the speakers.
Read Bloomberg Economics’ whole Week Ahead for EMEA for more information.
South America
The severity of Latin America’s economic slowdown will be revealed this week by a number of measures.
Mexico releases its final second-quarter GDP figures on Tuesday, which is anticipated to confirm the steady performance of the second-largest economy in the region, which is still benefited by robust exports to the US.
Following a GDP report that revealed Chile’s economy shrank less than anticipated in the second quarter, Chile will release data for manufacturing, industrial, and copper production in July on Thursday.
Also on Thursday, the July unemployment rates for Brazil, Mexico, and Colombia will be released.
On Friday, Brazil will release second-quarter GDP figures that will demonstrate the growth-delayed effects of high interest rates. After a better-than-expected performance in the first quarter of 2023, the largest economy in Latin America is predicted to see a significant slowdown.