This week will be packed with economic events and will also include the long-awaited release of September labor market data for the U.S. On Monday, the focus will be on inflation data from Canada while Tuesday, Australia will release the RBA monetary policy meeting minutes.
Wednesday brings Australia’s wage price index q/q, the U.K.’s inflation data, and the U.S. FOMC meeting minutes. On Thursday, the U.S. will publish unemployment claims and existing home sales.
Friday will be data-heavy, with Japan releasing its national core CPI y/y and the U.K. reporting retail sales m/m. Flash manufacturing and services PMIs will be published for the Eurozone, U.K., and U.S. In addition, the U.S. will release the revised UoM consumer sentiment and inflation expectations.
Throughout the week, several FOMC members are scheduled to deliver remarks.
In Canada, the consensus for CPI m/m is 0.2% vs. the prior 0.1%. The median CPI y/y is expected at 3.1% vs. 3.2%, trimmed CPI y/y at 3.0% vs. 3.1%, and common CPI y/y at 2.8% vs. 2.7%.
Today’s inflation data will be closely watched, with analysts expecting headline inflation to decline, driven largely by a sharp drop in gasoline prices pulling the overall rate lower. Food inflation is projected to remain near previous month’s pace, while updated property-tax inputs to the CPI are expected to rise, although less sharply than last year, according to RBC analysts.
Underlying inflation, however, is likely to remain firm. The removal of the federal carbon levy from most provincial energy categories continues to suppress headline readings, but core measures remain elevated. Prices excluding food and energy are expected to hold near 2.4% y/y, while the Bank of Canada’s preferred trimmed and median measures should hover around 3%.
From a monetary policy perspective, if inflation continues to ease, the Bank of Canada could be positioned to deliver additional rate cuts.
In Australia, the consensus for the wage price index (WPI) q/q is 0.8%, same as the prior reading. The WPI has been steady in recent quarters, but the underlying unadjusted data typically shows a bump in the September quarter due to the timing of annual minimum wage revisions.
Last year’s Fair Work Commission decision delivered a larger 3.75% increase in award wages, which contributed to a strong rise in the original (pre-seasonal adjustment) WPI series. This year’s increase was smaller at 3.5%, and wage momentum in individually negotiated agreements also appears to be easing.
Given this backdrop, Westpac expects a softer 0.7% gain for Q3 which is slightly below the broader market consensus of 0.8%.
With the U.S. government shutdown resolved, markets are now turning their attention to the release of several delayed data reports, with the most anticipated being the September nonfarm payrolls.
The consensus opinion is a 45K increase in payrolls for September and an unchanged unemployment rate of 4.3%. Broader labor indicators continue to point to a cooling, yet not collapsing, jobs market: private hiring has been subdued, high-frequency unemployment measures have edged higher, and layoff announcements have increased. Even so, state-level jobless claims do not yet indicate a widespread rise in layoffs.
The September report may not provide the full picture, and there is a risk the unemployment rate could tick up to 4.4%. Such an outcome would push unemployment above the Fed’s range for a “fully employed” economy and could raise expectations for a December rate cut.
Wage growth likely remained steady in September, supported by slow labor-force expansion and solid productivity. Average hourly earnings are expected to rise around 0.3% on the month, keeping annual wage growth near 3.7%. However, softer hiring and reduced hours worked may limit income momentum going forward, challenging consumers’ ability to sustain spending in an environment of persistent inflation, Wells Fargo analysts said.
This week’s Eurozone PMI data will offer fresh insights into regional growth. Both the manufacturing and services sectors surprised to the upside last month, with manufacturing returning to the 50 threshold and services also strengthening. The composite index rose to its highest level since mid-2024. However, export demand remained a weak spot, even though the pace of decline eased.
For November, economists expect only minor changes such as slightly softer services activity and a marginal improvement in manufacturing sentiment. While the baseline view is that the ECB will keep policy on hold, downside risks persist if inflation softens more than expected, the euro strengthens, or confidence indicators begin to weaken.
This article was written by Gina Constantin at investinglive.com.