The week ahead - 1-5 April 2024

The Netherlands – CPI inflation is expected to decline further to 2.4% yoy in March (was 2.8% in February). The largest driver of the decline is a negative contribution of energy, which pushes down the headline rate. Core inflation is expected to decline marginally as services inflation (excluding housing) continues to gradually come down. All in all, we expect the disinflationary trend to continue during 2024 but at a slower speed as labour intensive services make their mark.

US - We expect labour market indicators to cool further, consistent with the broad normalising trend in the economy. Job vacancies (February) are expected to continue to edge gradually lower, while payrolls growth (March) is expected to fall to a more trend-like rate, with an ongoing high risk of downward revisions to previous months’ data. The unemployment rate is expected to fall back slightly, however, as household survey employment is expected to rebound following a string of monthly declines. Average hourly earnings are expected to grow at a more normal monthly pace following a very weak February print. A host of Fed officials are also due to speak this week, and markets will be focused on whether officials repeat the more hawkish remarks of board member Waller on recent disappointing inflation readings.

China – The March PMIs are expected to bring further signs of a stabilising economy. The official manufacturing PMI is expected to have risen to (close to) the neutral 50 mark separating expansion from contraction, after having fluctuated below this neutral mark for most of 2023. Such a move would also more or less halve the remarkably wide gap with Caixin’s manufacturing PMI, which has been in expansion territory since October 2023 (and during most of 2023).