The most important events on Monday will be the release of the US ISM Manufacturing PMI and ISM Manufacturing Prices.
On Tuesday, the Eurozone will release flash core CPI y/y and flash CPI y/y. In addition, ECB President Lagarde and Fed Chair Powell will take part in a panel discussion entitled “Policy Panel” at the ECB Central Bank Forum in Sintra. The US will also release its JOLTS jobs data.
On Wednesday, the US is scheduled to release several key indicators including ADP Nonfarm Payroll Change, Jobless Claims, ISM Services PMI and FOMC minutes.
Swiss CPI data is due to be released on Thursday, while US markets are closed for Independence Day.
Finally, on Friday Canada will release payroll change and the unemployment rate, while in the US attention will be on average hourly earnings, nonfarm payroll change and the unemployment rate.
The US ISM Manufacturing PMI consensus is up from 48.7 to 49.2. After exceeding 50 in April, the manufacturing index has declined for two consecutive months, and this week’s forecast is for this trend to continue. Wells Fargo analysts believe this could be due to economic uncertainty, tight credit conditions and rising borrowing costs. As long as these conditions persist, the outlook for manufacturing and industrial production is not very bright.
The Eurozone’s flash CPI is expected to edge down slightly, but there are some upside risks. Overall, inflation figures for countries such as France and Spain look less encouraging, with somewhat mixed data.
The ISM Services PMI consensus fell slightly to 52.5 from 53.8. The services sector performed better than manufacturing as consumer demand for services remained high for months. But this is not conducive to the price stability the Fed hopes for.
Switzerland’s Consumer Price Index (CPI) is likely to continue to decline month-on-month. For reference, the Swiss National Bank cut interest rates in June and kept its inflation forecast for the second quarter of 2024 unchanged at 1.4% year-on-year. However, analysts stress that rising home rents and gasoline prices put pressure on inflation in May. If this week’s data is as expected, it will not have a significant impact on the Swiss National Bank’s decision. The bank forecasts a third quarter average of 1.5%, and unless inflation exceeds this average significantly, the bank may cut rates further at its September meeting.
The Bank of Canada will be closely watching labour market data this week to see if there are any continued signs of softening. Canadian inflation had been declining since the start of the year but rose in May, so the Bank of Canada will be closely watching labour market data to see if the downward trend continues.
The consensus on employment change is a decrease from 26.7K to 24.5K, with the unemployment rate expected to rise from 6.2% to 6.3%. The continued deterioration in the labor market will help ease some of the upward pressure on inflation. The market expects the Bank of Canada to cut interest rates further at its next meeting in July.
In the U.S., the consensus monthly average hourly earnings figure is 0.3%, down from the previous 0.4%. Nonfarm payroll change is expected to decrease from 272,000 to 189,000, and the unemployment rate is expected to remain unchanged at 4.0%.
Despite a solid increase in payrolls last month, there are signs that the U.S. labor market is cooling, as reflected in a decline in job openings and a rise in the unemployment rate to 4.0%, the highest level since 2022.
Wells Fargo analysts note that two-thirds of nonfarm payroll growth over the past year came from three industries: government and health care, which are less cyclical, and leisure and hospitality, which is still recovering from the pandemic. While these industries are expected to remain big contributors in the near term, a decline in the drivers of employment is likely to slow overall job growth in the coming months.