The week ahead - 28 October - 1 November 2024
These are the Key Macro Events for the upcoming week.
United States – We start the week on Tuesday with JOLTS job openings which will likely stay in the 8000k range. We expect Wednesday's Q3 real GDP growth estimate to come in at 3.0% SAAR again, on the back of strong consumer spending (3.2%), predominantly on services. Investment, particularly residential, will be a relative drag on growth, due to high interest rates, and economic policy uncertainty in the face of the US elections.
Our nowcasts for Thursday's PCE inflation put both headline and core at 0.2% m/m. The CPI report showed higher healthcare costs and higher airfares, which are likely to boost the core measure, despite the softening of shelter inflation. Personal income is up 0.3% m/m on the back of higher hourly wages but lower hours. Consistent with the headline quarterly figure, we expect spending to grow by 0.5% m/m.
Friday sees the labour market report. After last month's large 254k increase, we expect no change in nonfarm payrolls (+0k) this month. Partly this is due to the impact of the hurricanes, which will unwind in the coming months, but it also reflects the more fundamental cooling of the labour market, with layoffs by manufacturers and a slowdown in education sector hiring after last month's strong figure. The unemployment rate will stay at 4.1%. Friday also sees the ISM manufacturing reading, which may see a slight uptick - consistent with a less pessimistic beige book - but will remain in contractionary territory.
Eurozone –Inflation is expected to move higher, with energy picking up again on higher gas & electricity tariffs (petrol prices were flat overall in October), while goods inflation is also expected to edge higher from low levels. This will offset a continued slow easing in services inflation, which itself should help to bring core inflation down a touch, to 2.6%. Q3 GDP growth is expected to hold steady at 0.2% q/q, as continued strength in the periphery – and an Olympics bump in France – helps offset ongoing weakness in Germany.
Germany – On Wednesday German GDP data for the third quarter is released which might tip the eurozone’s largest economy in recession. Indeed consensus expectations (-0.1% qoq) as well as the German Bundesbank expect a small contraction for the quarter. This would come after the -0.1% contraction in Q2. Our expectations is that German GDP will be stagnant (0.0% qoq), with risks clearly to the downside.
The Netherlands – CPI inflation for October is expected to come in at 3.4% y/y, a marginal decline from the 3.5% in September. Compared to last year, food prices are elevated mainly due to the excise duty on tobacco implemented from 1 April 2024. Similarly, a higher housing rent indexation in combination with still elevated wage growth means inflation remains largely a services story. Prices for industrial goods and energy are expected to exert downward pressure on the inflation figure, although energy prices rose again compared to the previous month.
Asia – Following some improvement in the September activity data, the October PMIs for China are expected to show some pick-up as well. This partly reflects the fact that Beijing decided in late September to pay more focus on demand management. Meanwhile in Japan, we expect the Bank of Japan to keep its policy rate unchanged at 0.25% on Thursday, in line with consensus. When speaking in Washington this week, BoJ Governor Ueda indicated that the BoJ will have time to consider its next policy steps, pointing to the need to assess the impact from recent yen weakening and risks from the US economy/elections. Going forward, we expect the BoJ to continue with a gradual, modest hiking path.