Powell Speech and jobs data to help clarify Fed rate path

(Bloomberg) — Federal Reserve policymakers’ appetite for another big interest rate cut in November may be further sharpened next week as Jerome Powell addresses economists and the government releases new employment figures.

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The Fed chairman will discuss the US economic outlook at a National Association for Business Economics conference on Monday. Later in the week, the September jobs report is expected to show a healthy but subdued labor market.

In the world’s largest economy, wages rose by 146,000, based on the average estimate in a Bloomberg survey of economists. That’s similar to the increase in August and would leave the three-month average job gain near the weakest since mid-2019.

The unemployment rate was likely to hold at 4.2 percent, while average hourly earnings are expected to have risen 3.8 percent from a year earlier.

The recent turmoil in the labor force suggests that Friday’s jobs report could be the last clear reading of the US labor market before Fed policymakers meet in early November. Workers at the Boeing Co. factories. walked off the job in mid-September, and dockworkers on the Atlantic and Gulf coasts are threatening to strike from October 1.

In addition to the heavy monthly wages report, Tuesday’s jobs data is expected to show August vacancies held close to their lowest level since early 2021. Economists will also focus on the quit rate and of layoffs to assess the degree of cooling in labor demand.

What Bloomberg Economics Says:

“We expect a robust headline print for non-farm payrolls in September, which could even reignite talk of a ‘no-landing’ for the US economy. But we think the headline number will overstate the strength of the labor market, partly because of exaggerations related to the BLS’s birth-death model and partly because of temporary seasonal effects.”

—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou, and Chris G. Collins, Economists. For a full review, click here

Industry surveys will also help shed light on private sector employment. The Institute for Supply Management releases its September manufacturing survey on Tuesday and its services index two days later – both of which include employment measures.

In Canada, home sales data for several of the nation’s largest cities – Toronto, Calgary and Vancouver – will provide a glimpse of how the housing market is faring after a series of interest rate cuts by the central bank.

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Elsewhere, data expected to show a slowdown in global inflation – from the euro zone to Turkey to South Korea – as well as business surveys in China are among the highlights.

Click here for what happened in the past week, and below is our list of what’s happening in the global economy.

Asia

China kicks things off with a slew of purchasing managers’ indexes on Monday, a week after authorities unleashed an unusually broad set of stimulus measures that sent share prices higher.

The official manufacturing PMI could be higher, while it remains contractionary, and Caixin tools are seen holding steady just above the breakout or breakout range.

Manufacturing PMI figures are released a day later from Indonesia, Malaysia, Thailand, Taiwan, Vietnam and the Philippines.

In Japan, Shigeru Ishiba is expected to be named prime minister in a parliamentary vote on Tuesday.

The Bank of Japan’s Tankan survey is likely to show that business sentiment among large firms remained upbeat in the third quarter, while small manufacturers remained slightly pessimistic. Companies are seen revising their capital spending plans a bit more.

Inflation in South Korea is expected to moderate in September, giving the central bank further incentive to consider moving to an interest rate cut in October, while price growth in Pakistan is said to have slowed to its slowest pace in in early 2021.

Trade data is available from Australia, Sri Lanka and South Korea, and Vietnam releases third-quarter gross domestic product and September inflation next weekend.

Europe, Middle East, Africa

Eurozone data will take center stage. With inflation in France and Spain below the European Central Bank’s 2% target, reports from Germany and Italy on Monday, followed by the overall result for the region on Tuesday, will be closely watched.

With traders now betting on a rate cut at the ECB’s October meeting and economists starting to shift forecasts to predict the same, the data will be crucial evidence for policymakers who earlier tipped December for their next move.

Meanwhile, industrial production figures from France and Spain on Friday will give a picture of how weak output was during the quarter about to end.

The week features a flurry of ECB appearances, starting with President Christine Lagarde’s testimony to the European Parliament on Monday and followed the next day by a conference in Frankfurt hosted by the central bank.

Monday will be the last day in office for Swiss National Bank President Thomas Jordan, who has just overseen an interest rate cut and signaled more to come. His deputy, Martin Schlegel, will succeed him, and on Thursday the first inflation data under his watch will be released.

In Sweden, minutes from Tuesday’s Riksbank meeting on September 24 will provide more insight into why policymakers there decided to cut rates last week and open the door to a faster pace of easing in the coming months.

Britain has a relatively quiet week, with appearances by Bank of England chief economist Huw Pill and politicians Megan Greene among the highlights.

Inflation in Turkey, due on Thursday, likely fell to 48% in September. That would be below the central bank’s key rate – currently at 50% – for the first time in years. While it’s a sign of progress, officials still have work to do to hit an inflation target below 40 percent by the end of the year.

A number of monetary decisions are scheduled across the region:

• Mozambique’s central bank is set to cut borrowing costs for a fifth consecutive meeting on Monday, as price growth is expected to slow amid relative currency stability and a recent drop in oil prices. The gap between the benchmark and inflation is the largest among central banks tracked by Bloomberg.

• Icelandic officials are expected to keep their rate at 9.25 percent on Wednesday, extending the cap on western Europe’s highest borrowing costs to more than a year. Local lenders Islandsbanki hf and Kvika banki hf predict that Sedlabanki will begin to unwind at the last meeting of the year, scheduled for November 20.

• On the same day, Polish officials are expected to leave borrowing costs unchanged as they begin to rally around resuming tapering in the first quarter of 2025.

• Tanzania’s central bank is likely to keep rates steady on Thursday due to the inflationary impact of the currency’s current weakness. Its shilling has depreciated more than 3% against the dollar since July.

• Romania’s central bank meets on Friday and could cut borrowing costs further ahead of a reshuffle of the nine-member board, whose terms expire on October 15.

latin america

Colombian policymakers are all but certain to offer a seventh consecutive rate cut on Monday, equaling the longest easing cycle in more than two decades.

Economists anticipate a fifth straight cut of half a point, to 10.25%, and say the easing cycle still has room to run, with inflationary pressures and expectations falling. The bank posts the minutes of the meeting three days later.

Most analysts expect the data dump from Chile – seven separate indicators, including industrial production, retail sales, copper production and proxy GDP data – should show the economy gaining momentum towards the end of the year.

Consumer prices in Peru’s capital, Lima, likely held just above the 2 percent midpoint of the central bank’s September inflation target range.

Peru’s central bank chief Julio Velarde said the year-end reading should be between 2 percent and 2.2 percent and that the key rate may fall about 100 basis points below the Fed’s benchmark.

In Brazil, three purchasing managers’ indexes and industrial production data can be expected to show that Latin America’s largest economy is running and exceeding its potential growth rate.

The primary and nominal budget balance reports come as the nation’s public finances have once again become a hot-button issue.

–With assistance from Paul Wallace, Demetrios Pogkas, Ragnhildur Sigurdardottir, Brian Fowler, Robert Jameson, Jane Pong, Laura Dhillon Kane, Piotr Skolimowski, Monique Vanek, and Niclas Rolander.

(Updates with UK in EMEA section)

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