Looking at the week ahead, in Europe the focus will likely be on the flash August PMI readings. The readings for the Euro area, Germany and France are due on Thursday. Markets are expecting a modest 0.4pt decline for the Euro area composite PMI but we suspect plenty of focus will be on the flash manufacturing PMI reading for Germany given the softening data momentum over there. The other notable European releases this week also include the Euroarea trade balance today, UK inflation tomorrow, and German PPI on Wednesday.
Quickly looking at the potential market moving events this week, US payrolls on Friday will be the clear focus. In terms of expectations, our US colleagues are expecting a +225k print which matches the current Bloomberg consensus, while they expect the unemployment rate to drop one-tenth to 5.4%. Elsewhere, Thursday’s UK Election will be closely followed while Greece will once again be front and center.
OTTAWA — Canada’s labour market will emerge from the shadow of the United States next week, at least temporarily. But the outlook for job creation here will remain cloudy at best.
Most analysts are forecasting another month of moderate hiring in June, with anywhere between 22,000 and 30,000 positions being created. The latest employment tally from Statistics Canada, to be released Friday, will be one of two major data releases in the coming days.
Last week it was all about the ECB, which disappointed on hopes of further rate cuts (leading to the Thursday selloff) but delivered on the delayed realization that the ECB is now greenlighting a tsunami in buybacks (leading to the Friday market surge). This week it is once again all about central banks, only this time instead of stimulus, the risk is to the downside, with the BOJ expected to do nothing at all after the January NIRP fiasco, while the "data dependent" Fed will - if anything - hint at further hawkishness now that the S&P is back over 2,000.
It's a busy week for the market, and not to mention the Dow Jones-dependent Fed, which will have to parse through reports on Chicago PMI, Construction Spending, ISM (Mfg and Services), ADP, Productivity and Labor Costs, Factory Orders, Trade Balance, and the weekly highlight: Friday's Jobs reports.
WASHINGTON — U.S. private-sector employers stepped up hiring in December, suggesting some momentum in the economy as the year ended, even as a budget crisis loomed.
While other data on Thursday showed an increase in the number of Americans filing new claims for unemployment benefits, the trend remained consistent with steady job growth.
“The underlying economy has momentum, and the employment data confirms that. The hope and prayer of the market is that our political leaders don’t screw it up,” said John Brady, managing director at R.J. O’Brien & Associates in Chicago.
This week's main event will be the FOMC announcement on Wednesday at 2:00 pm and the subsequent press conference, the conclusion of the March 2-day Fed meeting, in which it is widely expected that Yellen will announce the end of the Fed's "Patience" with an economy in which resurgent waiters and bartenders continue to skew the job market even if it means consistently declining wages for 80% of the US labor force. Here is a summary of what else to expect this week from DB:
WASHINGTON — The number of Americans filing new claims for unemployment benefits fell last week, pointing to moderate job growth despite slowing economic activity.
Initial claims for state unemployment benefits declined 11,000 to a seasonally adjusted 346,000, the Labor Department said on Thursday. Claims for the prior week were revised to show 3,000 more applications received than previously reported.
Economists polled by Reuters had expected first-time applications to fall to 345,000 last week.
Since the March jobs report, initial jobless claims data has done nothing but get better. And this could be a big deal for Friday's April jobs report, according to Joe LaVorgna, economist at Deutsche Bank. In a note to clients ahead of the report, LaVorgna wrote: