Federal Reserve policymakers’ appetite for another interest rate cut in November may come into sharper focus in the coming weeks as Jerome Powell tells economists and the government releases new employment numbers.
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Published on 28 Sep 2024 • 6 minutes of reading
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(Bloomberg) — Federal Reserve policymakers’ appetite for another interest rate cut in November may come into sharper focus in the coming weeks as Jerome Powell briefs economists and the government releases new employment numbers.
The Fed chairman will discuss the US economic outlook at the National Association for Business Economics conference on Monday. By the end of the week, the September jobs report is expected to show a healthy, but moderate, labor market.
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Payrolls in the world’s largest economy were seen rising by 146,000, based on the median estimate in a Bloomberg survey of economists. That’s the same as August’s increase and would leave average job growth for the weakest three months since mid-2019.
The unemployment rate may be at 4.2%, while average hourly earnings are forecast to increase by 3.8% from the previous year.
Recent labor unrest suggests Friday’s jobs report could be the last clean reading on the U.S. labor market before Fed policymakers meet in early November. Boeing Co. factory workers walked in mid-September, and dock workers on the Atlantic and Gulf coasts threatened to strike starting October 1.
In addition to the heavy monthly salary report, job vacancies data on Tuesday will show August vacancies close to the lowest level since the beginning of 2021. Economists will also focus on the rate of resignations and dismissals to gauge the degree of cooling in labor demand.
What Bloomberg Economics said:
“We expect a strong headline print for September nonfarm payrolls, which may revive talk of “no landing” for the US economy. But we think the main figures will overstate the strength of the labor market, partly because of the overstatement associated with the model of ‘birth- off’ BLS, and partly due to temporary seasonal effects.
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—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins, economists. For the full analysis, click here
An industry survey will also help to gain insight into private sector recruitment. The Institute for Supply Management released its September manufacturing survey on Tuesday and its services index two days later – both of which include measures of the workforce.
- For more, read Bloomberg Economics’ full week for the US
In Canada, home sales data for some of the country’s largest cities – Toronto, Calgary and Vancouver – will provide a glimpse into the real estate market after several rate cuts from the central bank.
Elsewhere, data predicted to show slowing global inflation – from the euro zone to Turkey to South Korea – as well as a business survey in China were among the highlights.
Click here for what happened last week, and below is a wrap on the global economy.
Asian
China started Monday with a broad buying manager index, a week after authorities eased extraordinary stimulus measures that sent stock prices soaring.
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The official manufacturing PMI is likely to be higher as contraction continues, and the Caixin gauge looks stable above boom-or-bust.
Manufacturing PMI numbers are due 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.
- Read more: Japan’s ‘Oddball’ Leader Wants to Boost Military, Beat Deflation
The Bank of Japan survey will probably show business sentiment in large companies remains optimistic in the third quarter while small manufacturers remain somewhat pessimistic. The company appears to be revising its slightly higher capital expenditure plans.
South Korea’s inflation is expected to have cooled in September, giving the central bank additional incentive to consider pivoting to a rate cut in October, while price growth in Pakistan may have slowed to its slowest since early 2021.
Trade data is due from Australia, Sri Lanka and South Korea, and Vietnam will release third-quarter gross domestic product and September inflation next weekend.
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- For more, read Bloomberg Economics’ full week for Asia
Europe, Middle East, Africa
Eurozone data will take center stage. With inflation in France and Spain now below the European Central Bank’s 2% target, reports from Germany and Italy on Monday, followed by overall results for the region on Tuesday, will be closely watched.
With traders now pricing in a rate cut at the ECB’s October meeting, and economists starting to shift their forecasts to predict the same, the data will be important evidence for policymakers who were previously leaning towards December for the next move.
Industrial production numbers from France and Spain on Friday will give an indication of weak manufacturing in the coming quarter.
The week featured several ECB appearances, starting on Monday with President Christine Lagarde’s testimony to the European Parliament and continuing the following day with a conference in Frankfurt hosted by the central bank.
Monday will be the last day in the office of the President of the Swiss National Bank Thomas Jordan, who only oversees the rate cut and the signal to come. His deputy, Martin Schlegel, will succeed him, and Thursday will see the release of the first inflation data under his watch.
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In Sweden, minutes from the Riksbank’s Sept. 24 meeting on Tuesday will shed more light on why policymakers there decided to cut rates last week and open the door to faster easing next month.
Britain had a relatively quiet week, with appearances by Bank of England chief economist Huw Pill and policymaker Megan Greene among the highlights.
Turkey’s inflation due on Thursday may have fallen to 48% in September. That would be below the central bank’s key rate – currently at 50% – for the first time in years. While signs of progress, officials still have work to do to reach the sub-40% inflation target by the end of the year.
- For more, read Bloomberg Economics’ full week for EMEA
Some monetary decisions are scheduled in a wider area:
- On Monday, Mozambique’s central bank will cut borrowing costs for a fifth meeting, with price growth forecast to slow amid currency stability and lower oil prices. The spread between the benchmark and inflation is the widest among central banks tracked by Bloomberg.
- Icelandic officials are expected to keep rates at 9.25% on Wednesday, extending western Europe’s highest borrowing costs for more than a year. local lenders Islandsbanki hf and Kvika banki hf predict Sedlabanki will start easing at the end of this year’s meeting, scheduled for November 20.
- On the same day, Polish officials were asked to keep borrowing costs unchanged as they begin to join the cuts again in the first quarter of 2025.
- There is a possibility that the central bank of Tanzania will hold the rate steady because of the inflationary impact of the weakness of the active currency. The shilling has depreciated more than 3% against the dollar since July.
- Romania’s central bank met there, and can further cut the cost of debt before the reshuffle of the nine-member council, with a mandate that expires on October 15.
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Latin America
Colombian policymakers are set to cut rates for the seventh time on Monday, matching the longest easing cycle in two decades.
Economists expect a fifth half-point cut, to 10.25%, and say the easing cycle still has room to run as inflation prints and expectations fall. The bank sent the minutes of the meeting three days later.
Most analysts expect Chile’s dump data – seven separate indicators including industrial production, retail sales, copper output and GDP-proxy data – should show that the economy is gaining momentum by the end of the year.
Consumer prices in Peru’s capital, Lima, may be above the 2% midpoint of the central bank’s September inflation target.
Peru’s central bank chief Julio Velarde said the year-end reading should be between 2% and 2.2%, and the key rate could 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 heating up and exceeding its potential growth rate.
The main and nominal budget balance report comes as the country’s public finances have become a hot button issue again.
- For more, read Bloomberg Economics’ full week for Latin America
—With assistance from Brian Fowler, Robert Jameson, Jane Pong, Laura Dhillon Kane, Piotr Skolimowski, Monique Vanek, Niclas Rolander, Paul Wallace, Demetrios Pogkas and Ragnhildur Sigurdardottir.
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