Powell Speech and Jobs Data to Help Clarify Fed Rate Path

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(Bloomberg) — Federal Reserve policymakers’ appetite for another big interest rate cut in November may come into better focus next week as Jerome Powell addresses economists and the government releases new employment numbers.

The Federal Reserve Chairman is scheduled to discuss the US economic outlook at the National Association for Business Economics conference on Monday. At the end of the week, the September jobs report is expected to show a healthy and moderate labor market.

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Payrolls in the world’s largest economy are expected to rise by 146,000, based on the median estimate in a Bloomberg survey of economists. This is similar to the increase in August and would leave the three-month average job growth near its weakest levels since mid-2019.

The unemployment rate will likely remain at 4.2%, while average hourly earnings are expected to rise 3.8% from the previous year.

The latest labor unrest suggests that Friday’s jobs report may be the last clear read on the US labor market before Federal Reserve policymakers meet in early November. Boeing factory workers went on strike in mid-September, and port workers on the Atlantic and Gulf coasts are threatening to strike starting October 1.

In addition to the heavy monthly payrolls report, job openings data on Tuesday is expected to show that job openings in August remained near the lowest level since the start of 2021. Economists will also focus on the rate of dismissals and layoffs to gauge the extent of the slowdown in the economy. Labor demand.

What Bloomberg Economics says:

“We expect a strong headline for the September non-farm payrolls report, which could revive talk of a ‘no-bottom’ for the US economy. But we believe the headline number will overstate the strength of the labor market, in part because of the exaggerations associated with the ‘birth and death’ model. developed by the Bureau of Labor Statistics, partly because of temporary seasonal effects.

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—Anna Wong, Stuart Ball, Elisa Wenger, Estelle Au, and Chris J. Collins, economists. For the full analysis, 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.

• For more, read next week’s full US report from Bloomberg Economics

In Canada, home sales data for several of the country’s largest cities – Toronto, Calgary and Vancouver – will provide a look at how the real estate market is performing following a series of interest rate cuts from the central bank.

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 to find out what happened last week. Below is a summary of what will happen in the global economy.

Asia

China kicks things off on Monday with a series of purchasing managers’ indexes, a week after authorities launched an unusually wide range of stimulus steps that sent stock prices soaring.

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The official manufacturing PMI may rise while remaining contractionary, and Caixin metrics are expected to remain flat just above a boom or bust period.

Manufacturing PMI numbers are due a day after Indonesia, Malaysia, Thailand, Taiwan, Vietnam and the Philippines.

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

• Read more: Japan’s ‘strange’ leader wants to strengthen military and overcome deflation

The Tankan survey conducted by the Bank of Japan is likely to show that business sentiment in large companies remained optimistic in the third quarter while small manufacturers remained slightly pessimistic. Companies are seen to be revising their capital spending plans slightly higher.

Inflation in South Korea is expected to cool in September, giving the central bank an additional incentive to consider a shift to lower interest rates in October, while price growth in Pakistan may have eased to its slowest pace since early 2021.

Trade data is due from Australia, Sri Lanka and South Korea, and Vietnam will release its third-quarter GDP and September inflation at the end of next week.

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• For more, read Bloomberg Economics’ full report on next week for Asia

Europe, Middle East, Africa

Eurozone data will take center stage. With inflation in France and Spain now below the ECB’s 2% target, reports from Germany and Italy on Monday, followed by the region’s overall result 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 forecasts to predict the same, the data will be a crucial guide for policymakers who were earlier leaning towards December to make their next move.

Meanwhile, industrial production numbers from France and Spain on Friday will provide a glimpse into how weak manufacturing will be during the quarter that is about to end.

The week is marked by several ECB meetings, starting on Monday with President Christine Lagarde’s testimony before the European Parliament, followed the next day by a conference in Frankfurt hosted by the central bank.

Monday will be the last day on the job for Swiss National Bank President Thomas Jordan, who just oversaw a rate cut and signaled more to come. He will be succeeded by his deputy, Martin Schlegel, and Thursday will witness the release of the first inflation data under his supervision.

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

The UK has a relatively quiet week ahead, with highlights including appearances by Bank of England chief economist Hugh Bell and policymaker Meghan Green.

Turkey’s inflation rate due for release on Thursday likely slowed to 48% in September. That would be below the central bank’s key interest rate – currently at 50% – for the first time in years. Although this is a sign of progress, officials still have work to do to reach the sub-40% inflation target by the end of the year.

• For more, read next week’s full Bloomberg Economics EMEA report

A number of monetary decisions are scheduled to be made across the wider region:

• On Monday, Mozambique’s central bank is scheduled to cut borrowing costs for the fifth meeting in a row, with price growth expected to slow amid relative stability in the currency and the recent decline in oil prices. The spread between the benchmark index and inflation is the widest among central banks tracked by Bloomberg.
• Icelandic officials are expected to keep interest rates at 9.25% on Wednesday, extending the suspension of Western Europe’s highest borrowing costs by more than a year. Local lenders Islandbanki hf and Kvika Banki hf expect Sedlabanki to start easing at the last meeting this 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 cuts in the first quarter of 2025.
• Thursday is likely to see the Central Bank of Tanzania keeping interest rates steady due to the inflationary impact of the continued currency weakness. The value of the shilling has fallen by more than 3% against the dollar since July.
• Romania’s central bank meets on Friday and may cut borrowing costs further before reshuffling the nine-member council, with the mandate expiring on October 15.

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latin america

Colombian policymakers are certain to deliver their seventh straight interest rate cut on Monday, corresponding to the longest easing cycle in more than two decades.

Economists expect a fifth straight cut of half a point, to 10.25%, and say the easing cycle still has room to continue with inflation rates rising and expectations falling. The bank publishes the minutes of the meeting after three days.

Most analysts expect Chile’s data dump – seven separate indicators including industrial production, retail sales, copper production and gross domestic product data – to show the economy gaining momentum heading into the end of the year.

Consumer prices in Peru’s capital Lima are likely to remain just above the 2% average of the central bank’s inflation target range in September.

Peru’s central bank president, Julio Velarde, said the year-end reading should be between 2% and 2.2%, and that the key interest rate could fall by about 100 basis points from the Fed’s benchmark.

In Brazil, three PMIs and industrial production data are expected to show that Latin America’s largest economy is on pace to exceed its potential growth rate.

The preliminary and nominal budget balance reports arrive as the country’s public finances once again become a hot-button issue.

• For more, read the full Latin America Week from Bloomberg Economics

– With assistance from Brian Fowler, Robert Jameson, Jane Pong, Laura Dillon Kane, Piotr Skolimowski, Monique Vanek, Niklas Rolander, Paul Wallace, Dimitrios Bojkas, and Ragnildur Sigurdardóttir.

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