Here’s a closer look at the economic events lined up for the coming week, along with what analysts are predicting:
Monday: The week starts off with key economic indicators from several major economies, including China’s Caixin Services PMI, Germany’s Consumer Price Index (CPI), and the Services PMI from Canada.
Tuesday: A busy day with Switzerland reporting its CPI; France, the broader Eurozone, and the U.S. will also be releasing their CPI figures. Additionally, the U.S. ISM Services PMI and Job Openings data are among the highlights.
When we focus on Switzerland, the CPI is anticipated to show a year-over-year increase of 0.6%, slightly down from the previous 0.7%. The month-over-month figure is expected to remain unchanged at -0.1%. The Swiss National Bank recently cut its policy rate by 50 basis points to 0.50% and has now removed guidance on further cuts. This signals a potential deceleration in easing measures, aligning with market expectations for two more 25 basis point rate cuts this year. Looking ahead, the SNB has set a forecast for inflation averaging 0.3% in Q1 2025, which will guide their approach in the upcoming March meeting.
Meanwhile, the Eurozone’s CPI is projected to rise to 2.4% annually, up from 2.2%, with core CPI holding steady at 2.7%. The European Central Bank trimmed its rate by 25 basis points to 3.00% in its last meeting and dropped language suggesting prolonged restrictive policies, indicating a reduction in inflationary pressures. Markets anticipate a high likelihood of a rate cut at the next meeting, with expectations of up to 102 basis points of easing for the remainder of the year.
Across the pond, the U.S.’s ISM Services PMI is forecasted to climb to 53.0 from 52.1. The S&P Global U.S. Services PMI indicated an uptick in services activity, reaching a 38-month high, driven by new orders and subdued inflationary pressures. This paints a positive outlook for the services sector.
The U.S. Job Openings are expected to be 7.7 million, slightly below the previous 7.744 million. Recent data exceeded forecasts, with a notable rebound in the quits rate but a decline in the hiring rate. Although finding jobs remains challenging, job security is relatively strong. There’s optimism for improvement as we progress through the year, and early signs are promising.
Wednesday: Australia’s monthly CPI will be under scrutiny with expectations of a year-over-year rise to 2.3% from 2.1%. The Reserve Bank of Australia has taken a more dovish path recently, nearing the first rate cut. Markets are gearing up for a potential cut as soon as February, although the consensus points to April. Upcoming Q4 CPI and employment data may further influence these expectations.
Thursday: Japan will report its Average Cash Earnings which are expected to show a modest increase to 2.7% from 2.6%. The Bank of Japan has kept rates steady, and Governor Ueda has emphasized the importance of wage data in decision-making. The market has pushed back expectations for a rate hike to March, as more clarity is anticipated in the coming months.
In the U.S., jobless claims are closely watched as an up-to-date measure of the labor market. Initial claims are predicted at 217,000, a rise from the previous 211,000. Continuing claims, while lacking a current consensus, previously showed a drop to 1.844 million from 1.910 million. These figures offer critical insights into ongoing employment trends.
Friday: Canada’s employment report is expected to show a slowdown with 25,000 jobs added in December compared to 50,500 in November, while unemployment may inch up to 6.9%. The previous robust figure came with caveats like increased public sector roles and stagnant private sector growth. The broader rise in unemployment during 2023 has largely been due to job search challenges rather than layoffs, which often characterize recessions.
The Bank of Canada recently cut its rate by 50 basis points and seems to have halted its policy of further cuts. They’ve adopted a wait-and-see approach based on future data, with markets projecting at least two more 25 basis point cuts this year, potentially starting this month.
In the U.S., the Non-Farm Payroll (NFP) report anticipates 160,000 new jobs in December, down from November’s 227,000, with the unemployment rate holding steady at 4.2%. Average Hourly Earnings are projected to increase by 4.0% annually, with a month-over-month climb of 0.3%. While the Federal Reserve sees the unemployment rate averaging 4.3% for the year, inflation remains the primary focus. Consequently, upcoming CPI data may sway economic policy more significantly than the NFP figures.
