Economic Snapshot for the Week Ahead: Week of October 3, 2022
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With global recession risks rising, upcoming PMI survey data for major global economies will come under scrutiny over the coming week, as will the Nonfarm Payrolls report. in the United States on Friday, which will provide important indications of the policy direction of the Fed. Although a scheduled meeting at the RBA will be the main event from a policy-making perspective, markets will be watching closely for potential Bank of England interventions amid volatility in gilt and gilt markets. foreign exchange, as well as political developments in the UK.
The week begins with a flood of manufacturing PMIs. Markets will assess the potential for global factory price pressures to ease following a recent moderation in supply chain pressures and weaker demand. However, slowing demand, ongoing COVID-19 containment measures in mainland China, uncertainty over Russia and energy supply issues in Europe remain major concerns for the economic outlook.
Later in the week will come PMIs from the services sector, where the impact of the cost of living crisis on consumer spending will be a key development to watch. However, the surveys will also help understand the impact of tighter financial conditions on financial services around the world (see box), as well as any pass-through of higher prices to wages.
The week ends with the US jobs report, for which markets expect growth in nonfarm payrolls to slow from a gain of 315,000 in August to 250,000 in september. This would be the worst performance since December 2020, although the slowdown in the pace of job creation partly reflects a natural moderation in hiring amid the current tight labor market. The unemployment rate should remain at 3.7%. Average hourly wage growth should hold steady at 0.3%. Any stronger-than-expected labor market trend will naturally reinforce the growing prospect of more aggressive Fed tightening, including a higher restrictive funds rate peak that may need to be held for longer.
In a busy week, also watch for US factory orders data and industrial production figures from Germany, France and Spain, as well as the Japanese Tankan survey.
Financial services lead the global slowdown
PMI survey data released in the coming week will provide timely information on macro trends around the world at the end of the third quarter, covering both manufacturing and services. However, survey data can also be used to analyze economic trends by industry. Data from August showed that the biggest drag on global growth is now financial services, with real estate activity falling particularly sharply, reflecting the recent tightening of financial conditions. However, there has also been a major deterioration in the performance of consumer-facing service sectors, notably travel and tourism, where a post-vaccine demand rebound has stalled globally in a against a backdrop of soaring energy costs and the rising cost of living, which has diverted spending away from non-essential goods. Automotive also continued to suffer from lack of supply. September data will be
published by S&P Global.
Calendar key events
monday october 3
Global Manufacturing PMI Surveys (Sep)
Tankan survey in Japan (Q3)
ISM US Manufacturing Survey (Sep)
Inflation in Indonesia (Sept.)
Inflation in Switzerland (Sept.)
India’s Trade Balance (Sep)
Brazil’s Trade Balance (Sep)
tuesday october 4
Australia mortgages, building permits (August)
Australian RBA Policy Decision
Unemployment in Spain (Sept.)
Eurozone PPI (August)
US Factory Orders, JOLTS (August)
GDP of Russia (August)
Wednesday, October 5
Global Services and Composite PMI Surveys (Sep)
US ISM Non-Manufacturing Survey (Sep)
Inflation in South Korea (Sept.)
New Zealand RBNZ Policy Decision
Inflation in the Philippines (Sept.)
Inflation in Thailand (Sept.)
Australian Retail Sales (August)
Germany’s Trade Balance (August)
Industrial production in France (August)
ECB non-monetary policy meeting
Spanish Consumer Confidence (Sept.)
U.S. MBA Mortgage Applications/30-Year Mortgage Rate
Brazil Industrial Production (August)
US Trade Balance (Aug), ADP Employment (Sep)
Canada’s Trade Balance, Building Permits (August)
Political decision of Poland
Thursday, October 6
Detailed Global PMI Sector Data (Sep)
Australia’s Trade Balance (August)
Inflation in Taiwan (Sept.)
Inflation in the Netherlands (Sept.)
Factory orders in Germany (August)
Industrial production in Spain (August)
UK and Eurozone Construction PMI (Sep)
Eurozone retail sales (August)
Retail sales in France (August)
US Unemployment Insurance Claims
friday october 7
Household spending in Japan (August)
German Industrial Production (August)
House prices in Halifax UK (Sep)
France’s trade balance (August)
Retail sales in Italy (August)
Canadian Labor Market Statistics (Sept.)
US Jobs Report (Sep)
U.S. consumer credit, wholesale inventories (August)
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What to watch
Americas: US Nonfarm Payrolls, Unemployment and Wages, Factory Orders, Consumer Credit, PMI and ISM
The US week kicks off with the PMI and ISM surveys and ends with the jobs report, providing plenty of fresh information on the trajectory of economic growth and inflation trends.
Flash PMI data showed a weak September ending the worst quarter since 2009 – barring initial pandemic lockdowns – albeit with a clear cooling from the services sector slowdown, linked in part to easing pressures inflationary and some dip in consumer confidence. The ISM non-manufacturing surveys remained dynamic, so a drop should be observed in September.
Slower growth is also expected for non-farm payrolls, with a gain of 250,000 currently the consensus versus a rise of 315,000 in August. Also monitor US factory orders, job postings and consumer credit data, as well as Canadian labor market statistics.
Europe: Manufacturing PMI, construction and services, retail sales, industrial production and trade updates
Final manufacturing and services PMIs will be updated for the Eurozone, UK and other troubled Eastern European countries, along with detailed sector PMI indices to provide additional information on economic trends in a context of recession risks in the region. Industrial production data from Germany, France and Spain will also be eagerly awaited to gauge the impact of the region’s energy crisis on factories. Also look for UK house price data, as well as German factory orders and trade figures, as well as Eurozone retail sales and a political decision in Poland.
Asia-Pacific: RBA and RBNZ Interest Rate Decisions, Mainland China and Other APAC PMIs
PMI data for mainland China will be on the agenda as global trade growth slows as domestic demand remains subdued due to ongoing COVID-19 containment measures. Other PMI data for APAC economies showed mixed trends, with India and Vietnam notably opposing a broader global slowdown. In Japan, services growth was likely boosted by the easing of COVID-related restrictions, while the factory PMI and Tankan survey will be scrutinized for the impact of the weaker yen on exports of goods.
The main political meeting of the week takes place in Australia, accompanied by a gathering of decision-makers in New Zealand. The RBA has risen in each of the past five months to bring its key rate to 2.35%, but inflation has continued to rise and the labor market remains tight. Another hike, potentially of 50 basis points, is therefore widely anticipated.
United States | Chris Williamson
Singapore | Rajiv Biswas
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Purchasing Managers’ Index™ (PMI™) data is compiled by IHS Markit for over 40 economies worldwide. Monthly data are drawn from surveys of senior executives of private sector companies and are available by subscription only. The PMI data set includes a headline figure, which indicates the overall health of an economy, and sub indices, which provide insight into other key economic drivers such as GDP, inflation, exports, l utilization, employment and stocks. PMI data is used by finance and business professionals to better understand where economies and markets are going and to uncover opportunities.
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.