(Bloomberg) — Federal Reserve policymakers’ desire for another big interest rate cut in November may come into sharper focus next week as Jerome Powell addresses economists and the government releases new employment numbers.
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The Fed chief will discuss the U.S. economic outlook at the National Association for Business Economics conference on Monday. By the end of the week, the September jobs report is expected to show a healthy, but modest, labor market.
Wages in the world’s largest economy rose by 146,000, based on the average estimate in a Bloomberg survey of economists. That’s similar to August’s increase, and the three-month average of job growth since mid-2019 will be near its weakest.
The unemployment rate is expected to remain at 4.2%, while average hourly earnings are projected to rise 3.8% from a year earlier.
Recent labor unrest suggests Friday’s jobs report could be the last clean reading of the U.S. employment market before central bank policymakers meet in early November. Boeing Co. Factory workers walked off the job in mid-September, and dock workers on the Atlantic and Gulf coasts threatened to strike on October 1.
In addition to the heavyweight monthly wage report, Tuesday’s jobs data showed August vacancies are expected to be at their lowest level since early 2021. Economists tend to focus on exit rates and layoffs. Labor is needed.
Here’s what Bloomberg Economics says:
“We expect a strong headline print for non-farm payrolls in September, which could revive even talk of “no takeoff” for the U.S. economy. But due to overestimations associated with the BLS’s ‘birth-death’ model and somewhat temporary seasonal effects, the headline picture may overstate labor-market strength. We think so.
-Anna Wong, Stuart Ball, Elisa Winger, Estelle Oh and Chris G. Collins, Economists. For full analysis, click here
Industry surveys can shed light on private sector recruitment. The Institute for Supply Management releases its September manufacturing survey on Tuesday and the services index two days later — both of which include employment measures.
In Canada, home sales data from the country’s biggest cities — Toronto, Calgary and Vancouver — will see how the real estate market fares after a series of rate cuts by the central bank.
Elsewhere, highlights include data showing a slowdown in global inflation – from the euro zone to Turkey to South Korea – and business surveys in China.
Click here to find out what happened in the past week, and below is our summary of what’s to come in the global economy.
Asia
China opens its purchasing managers’ index on Monday to lift stock prices, a week after authorities unleashed an unusually wide range of stimulus measures.
The official manufacturing PMI may tick higher when it’s brief, and Caixin gauges can be seen holding steady just above the boom-or-bust line.
Manufacturing PMI figures from Indonesia, Malaysia, Thailand, Taiwan, Vietnam and the Philippines are due a day later.
Shigeru Ishiba is expected to be appointed prime minister in a parliamentary vote in Japan on Tuesday.
The Bank of Japan’s Tangen survey will show that business sentiment among large firms remained optimistic in the third quarter, while smaller manufacturers remained slightly pessimistic. Companies may find themselves revising their capital expenditure plans slightly more.
South Korea’s inflation is forecast to cool in September, giving the central bank an additional incentive to consider a rate cut in October, while price growth in Pakistan is likely to slow to the slowest pace since early 2021.
Trade data is due from Australia, Sri Lanka and South Korea, and Vietnam will release third-quarter GDP and September inflation later next week.
Europe, Middle East, Africa
Euro-zone data takes center stage. With inflation in France and Spain now below the European Central Bank’s 2% target, reports from Germany and Italy on Monday, followed by the region’s overall result on Tuesday, will be closely watched.
Traders are now pricing in a rate cut at the October ECB meeting, and economists are starting to revise forecasts, and the data will be an important resource for policymakers as they lean toward December for their next move.
Industrial production numbers from France and Spain on Friday, meanwhile, will provide a glimpse into how weak manufacturing was in the quarter to end.
The week featured several ECB appearances, starting with President Christine Lagarde’s testimony to the European Parliament on Monday and a conference in Frankfurt hosted by the central bank the following day.
Monday is the final day in office for Swiss National Bank President Thomas Jordan, who has overseen interest rate cuts and signals of impending doldrums. His deputy, Martin Schlegel, will succeed him, and the first inflation data will be released under his watch on Thursday.
In Sweden, on Tuesday the Riksbank’s Sep. Minutes from the 24 meeting will provide more insight into why policymakers there decided to cut tariffs last week.
The UK has had a relatively quiet week, with Bank of England Chief Economist Huw Bill and policymaker Megan Green in attendance.
Turkish inflation fell to 48% in September on Thursday. That would be below the central bank’s key rate – currently 50% – for the first time in years. Despite the signs of progress, officials still have work to do to reach their target of 40% inflation by the end of the year.
A number of cash decisions are planned around the wider region:
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On Monday, Mozambique’s central bank is set to cut borrowing costs for a fifth consecutive meeting, with the currency’s relative stability and price growth forecast to slow amid a recent drop in oil prices. The spread between the benchmark and inflation is the widest among central banks tracked by Bloomberg.
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Icelandic authorities are expected to keep their rate at 9.25% on Wednesday, extending western Europe’s high borrowing costs for more than a year. Local lenders Islandsbanki hf and Kvika banki hf predict Setlabanki will be relaxed at the final meeting scheduled for November 20 this year.
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On the same day, Polish authorities are expected to leave borrowing costs unchanged while resuming cuts in the first quarter of 2025.
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On Thursday, Tanzania’s central bank kept rates steady due to the inflationary impact of ongoing currency weakness. Its shilling has fallen more than 3% against the dollar since July.
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Romania’s central bank meets on Friday to further cut borrowing costs ahead of a restructuring of the nine-member board, whose mandates expire on October 15.
Latin America
Colombian policymakers are set to deliver a seventh consecutive rate cut on Monday.
Economists expect a fifth straight half-point cut, to 10.25%, and say the easing cycle still has room to run with inflationary prints and expectations of a slowdown. The bank publishes the minutes of the meeting after three days.
Most analysts expect Chile’s data dump — seven separate indicators including industrial production, retail sales, copper output and GDP-proxy data — to show the economy gaining momentum heading into the end of the year.
Consumer prices in Peru’s capital Lima are likely to be slightly above the central bank’s midpoint of the 2% inflation target range in September.
Peru’s central bank chief Julio Velarde said the year-end reading should be between 2% and 2.2%, with the key rate falling 100 basis points below the central bank’s benchmark.
In Brazil, three purchasing managers’ indexes and industrial production data can be expected to show that Latin America’s largest economy is running hot and above its potential growth rate.
As the country’s public finances have once again become a hot-button issue, the primary and nominal budget balance reports arrive.
–With assistance from Robert Jameson, Jane Bong, Laura Dhillon Kane, Piotr Skolimowski, Monique Vanek, Niklas Rollander, Paul Wallace, Demetrios Bokas, Rockhildur Sigurdartóttir, and Brian Fowler.
(Updates with dock workers after the fifth column)
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2024-09-29 18:44:58