Week of 31st JULY - 4th AUGUST 2023
Week of 31st JULY - 4th AUGUST 2023
31 July 2023
Monday
On July 31st, one high-impact announcement is scheduled:
- Chinese Manufacturing PMI
Chinese Manufacturing PMI
In June, China's factory activity declined for a third consecutive month, and non-manufacturing activity hit its lowest level since the relaxation of "zero Covid" policies. The latest data revealed a patchy recovery in the world's second-largest economy, with growth momentum having lost steam.
According to the National Bureau of Statistics, the official manufacturing PMI for June was 49.0, compared to 48.8 in May and 49.2 in April, in line with Reuters' median forecast.
The official non-manufacturing PMI for June was 53.2, down from 54.5 in May and 56.4 in April. A PMI reading above 50 indicated expansion, while below 50 suggested contraction.
Zhang Zhiwei, President, and Chief Economist of Pinpoint Asset Management, commented on China's economic momentum, stating it was still weak, and the global economic slowdown might have further pressured external demand in the coming months.
While the Chinese government's growth target of 5% for this year was modest given last year's low base, it remained uncertain if the current economic data would prompt the government to implement aggressive stimulus measures soon.
The next Chinese Manufacturing PMI is scheduled on the 31st of July 2023 at 02:30 AM GMT+1.
The consensus forecast for the PMI is 49.5, which is higher than the previous month's actual reading of 49.0.
TL;DR:
- The Chinese Manufacturing PMI is expected to expand slightly, with a consensus forecast of 49.5.
- The previous month's actual reading was 49.0, so the manufacturing sector is expected to grow after contracting in June.
- The release of the Manufacturing PMI will be closely watched by markets.
1 August 2023
Tuesday
On August 1st, four high-impact announcements are scheduled:
- Australia Cash Rate & Reserve Bank of Australia Statement
- The US ISM Manufacturing PMI
- The US JOLTS Job Openings
- New Zealand Employment Change q/q & New Zealand Unemployment rate
Australia Cash Rate & Reserve Bank of Australia Statement
The Reserve Bank of Australia (RBA) is expected to discuss the following issues at its Statement on Monetary Policy meeting on August 1, 2023:
- The state of the Australian economy. The RBA will assess the latest economic data, including employment, inflation, and GDP growth.
- The outlook for inflation. The RBA will need to decide whether to raise interest rates in order to bring inflation back to its target of 2-3%.
- The impact of the war in Ukraine on the Australian economy. The war has caused energy prices to rise, which is putting upward pressure on inflation.
- The global economic outlook. The RBA will need to consider the impact of the global economic slowdown on the Australian economy.
In a closely monitored move, Australia's central bank decided to maintain its official cash rate at 4.10% on Tuesday 4th of July. Prior to the announcement, economists were divided in their predictions, with 16 out of 31 respondents expecting a 25-basis points hike, while 15 anticipated the rate to remain unchanged. The stock market received the news positively as the central bank indicated that inflation in the economy had already reached its peak. Consequently, the S&P/ASX 200 index recovered from earlier losses, surging by 0.5%. However, the Australian dollar faced some downward pressure, weakening by 0.25% against the U.S. dollar, reflecting the market's immediate response to the decision. Investors and market participants are closely monitoring the central bank's approach amid ongoing economic developments and the evolving global landscape.
The next announcement for the Australia Cash Rate & Reserve Bank of Australia Statement is scheduled for 1st August 2023 at 05:30 AM GMT+1.
The consensus forecast for the cash rate is that it will be increased at 4.35%. However, there is a risk that the RBA could raise rates by 25 basis points. The decision will depend on the latest economic data, including inflation and employment figures.
TL;DR:
- The Reserve Bank of Australia is scheduled to release its Statement on Monetary Policy on August 1, 2023 at 05:30 AM GMT+1.
- The RBA is widely expected to increase the cash rate at 4.35%, but there is a risk that it could raise rates by 25 basis points.
- The decision will depend on the latest economic data, including inflation and employment figures.
- The war in Ukraine and the global economic slowdown are also factors that the RBA will need to consider when making its decision.
- The release of the RBA's Statement on Monetary Policy will be closely watched by markets.
US ISM Manufacturing PMI
In June, the US Manufacturing PMI® declined to 46, down by 0.9 points from May's 46.9. This marks the seventh consecutive month of contraction after 30 months of expansion in the overall economy. Key indices like the New Orders Index, Production Index, Prices Index, Backlog of Orders Index, and Employment Index all remained in contraction territory, indicating a lack of growth. The Supplier Deliveries Index reached its lowest reading since March 2009 at 45.7. Additionally, the Inventories Index dropped to 44, while the New Export Orders Index and Imports Index also showed signs of contraction. These figures highlight the challenging economic conditions the US manufacturing sector is currently facing amidst ongoing uncertainties.
The next ISM Manufacturing PMI is scheduled for August 1st, 2023, at 3:00 PM GMT+1.
The forecast for the August announcement is for a further decline in the PMI to 45.0.
US JOLTS Job Openings
In May, the number of job openings declined to 9.8 million on the last business day, according to the U.S. Bureau of Labor Statistics. Hires (6.2 million) and total separations (5.9 million) showed little change over the month. Among separations, quits increased to 4.0 million, while layoffs and discharges remained relatively stable at 1.6 million. The largest decreases in job openings were in health care and social assistance, finance and insurance, and other services. However, job openings increased in educational services, state and local government education, and federal government. Hires remained steady, except for a rise in durable goods manufacturing. Retail trade saw an increase in both total separations and layoffs and discharges. The number of quits increased in health care and social assistance, as well as in construction. The overall economic landscape showed mixed trends amid ongoing uncertainties.
The next upcoming JOLTS Job Openings will take place on 1st of August 2023 at 3:00 PM GMT+1.
The forecast for the August announcement is for 9.5 million job openings. This forecast is based on a survey of businesses by the Bureau of Labor Statistics.
New Zealand Employment Change q/q & Unemployment Rate
In March 2023, employment in New Zealand experienced a significant increase of 0.8%. Despite this positive growth, the unemployment rate remained unchanged at 3.4% during the first quarter of the same year. The country's unemployment rate had fluctuated between a maximum of 11.2% and a minimum of 3.4%. These latest figures indicated a stable labor market in New Zealand, with steady employment gains and a consistently low unemployment rate.
The next upcoming Employment Change q/q & Unemployment Rate is scheduled on August 1st 2023 at 11:45 PM GMT+1.
The consensus forecast is for employment to increase by 0.1%, following an increase of 0.8% in the previous quarter.
The consensus forecast is for the unemployment rate to remain unchanged at 3.4%, following a reading of 3.4% in the previous quarter
2 August 2023
Wednesday
On August 2nd, one high-impact announcement is scheduled:
- The US ADP Non-Farm Employment Change
The US ADP Non-Farm Employment Change
In June, the U.S. labor market continued to surge, with private sector jobs increasing by 497,000, the highest since July 2022. Industries like leisure and hospitality, construction, trade, transportation, and utilities led in new hires. Annual pay rose at a 6.4% rate, indicating inflationary pressures. Despite Federal Reserve rate increases, job creation remained strong, even with many open positions available.
The next upcoming ADP Non-Farm Employment change will take place on the 2nd of July 2023 at 1:15 PM GMT+1.
The forecast for the August announcement is for an increase of 325,000 jobs. This forecast is based on a survey of 400,000 U.S. business clients.
3 August 2023
Thursday
On August 3rd, five high-impact announcements are scheduled plus a speech by the Governor of the Bank of England, Andrew Bailey will take place.:
- Swiss CPI m/m
- GBP MPC Official Bank rate Votes
- Bank of England to Release Monetary Policy Summary on August 3rd
- Bank Of England Andrew John Bailey Speech
- US Unemployment Claims
- US ISM Services PMI
Swiss CPI m/m
In June 2023, the consumer price index (CPI) increased by 0.1% compared to the previous month, reaching 106.3 points, according to the Federal Statistical Office (FSO). The inflation rate was +1.7% compared to the same month in the previous year. The 0.1% monthly increase was attributed to various factors, including higher prices for fruiting vegetables and brassicas. Additionally, hotels and private means of transport experienced price hikes. On the other hand, air transport and stone fruit prices decreased, along with petrol and diesel prices.
The next upcoming announcement for the Swiss CPI m/m will take place on Thursday the 3rd of August 2023 at 07:30 AM GMT+1.
The consensus forecast for the Swiss CPI m/m for the month of July 2023 is 0.4%. This forecast is based on a survey of businesses by the FSO.
GBP MPC Official Bank rate Votes
The upcoming MPC Official Bank Rate Votes on Thursday, August 3rd, 2023 at 12:00 PM GMT+1 is expected to see the Bank of England raise the Bank Rate by 0.25 percentage points to 5.25%. This would be the fifth consecutive rate hike by the MPC, and it would take the Bank Rate to its highest level since 1997. The MPC will need to weigh the risks of raising the Bank Rate too quickly against the risks of letting inflation continue to rise. It is likely that the MPC will raise the Bank Rate by 0.25 percentage points on August 3rd, but it is possible that they could raise it by more or less. The decision will depend on the latest economic data and the outlook for inflation.
Bank of England to Release Monetary Policy Summary on August 3rd
The Bank of England is expected to release its Monetary Policy Summary (MPS) on August 3rd, 2023. The MPS will provide an overview of the Monetary Policy Committee’s (MPC) discussion of monetary policy and their decision on the Bank Rate.
The MPS is expected to focus on the recent surge in inflation in the UK. Inflation has risen to its highest level in 40 years, and it is expected to continue to rise in the coming months. The MPC is under pressure to take action to cool the economy and bring inflation down.
The MPS is also likely to provide an update on the MPC’s forecasts for inflation and economic growth. The MPC is likely to downgrade its forecasts for economic growth in the coming months, but they are likely to maintain its forecast for inflation to peak in the coming months.
The MPS is an important document for financial markets and economists. It provides an insight into the MPC’s thinking on monetary policy and their assessment of the UK economy. The MPS is also likely to have a significant impact on interest rates, inflation, and economic growth.
Here are some of the key things to watch out for in the MPS:
- The MPC’s assessment of the recent surge in inflation.
- The MPC’s forecast for inflation in the coming months.
- The MPC’s forecast for economic growth in the coming months.
- The MPC’s decision on the Bank Rate.
Bank Of England Andrew John Bailey Speech
Governor of the Bank of England, Andrew Bailey, is set to deliver a crucial speech on Thursday, August 3rd,addressing the UK’s economic outlook and strategies to tackle soaring inflation. Market experts anticipate keen insights into the impact of the ongoing conflict in Ukraine on the UK economy. The financial markets and economists are eagerly awaiting Bailey’s remarks, as they could heavily influence interest rates, inflation rates, and overall economic growth. The speech holds substantial importance in guiding the nation through the current economic challenges.
US unemployment claims
In the week ending July 15, there were positive signs in the U.S. job market as initial jobless claims decreased. The seasonally adjusted figure for initial claims was 228,000, showing a decline of 9,000 compared to the previous week's unrevised level of 237,000. Moreover, the 4-week moving average dropped to 237,500, marking a decrease of 9,250 from the previous week's average of 246,750.
The next upcoming unemployment claims will take place on Thursday 3rd of August 1:30 PM GMT+1.
The consensus forecast is for 230,000 claims, following 221,000 claims in the previous week.
US ISM Services PMI
In June, the services sector in the United States demonstrated continued growth, expanding for the sixth consecutive month, as per the latest Services ISM® Report On Business®. The Services PMI® registered 53.9 percent, indicating favorable economic activity in this domain. The report, based on data from the nation's purchasing and supply executives, highlighted the sector's resilience, with growth recorded in 36 of the last 37 months, and only a single contraction in December of the previous year. Notably, the Business Activity Index stood at 59.2%, the New Orders Index at 55.5%, the Employment Index at 53.1%, and the Supplier Deliveries Index at 47.6%. This positive trend reflected the ongoing recovery and strength in the services industry, contributing to the nation's economic rebound.
The next US ISM Services PMI announcement is scheduled for Thursday, August 3rd, 2023, at 3:00 PM GMT+1.
The consensus forecast is for the index to come in at 52.2, following 53.9 in the previous month.
4 August 2023
Friday
On August 4th, three high-impact announcements are scheduled:
- CAD Employment change & CAD Unemployment Rate
- US Average Hourly Earnings m/m
- US Non-Farm Employment Change & US Unemployment Rate
CAD Employment Change & Unemployment Rate
In June, Canadian employment increased by 60,000, mainly in full-time work. However, the unemployment rate also rose to 5.4% as more people searched for jobs. The gains were seen in young men aged 15 to 24 and men aged 25 to 54. Certain provinces experienced growth, while others saw declines. Industries like wholesale and retail trade, manufacturing, and health care and social assistance saw increases, but construction, educational services, and agriculture faced declines. Average hourly wages rose by 4.2% year-over-year, and total hours worked remained stable. The job market shows a mixed performance, reflecting ongoing economic dynamics.
The next announcement for CAD Employment change & Unemployment Rate is scheduled for Friday, August 4th, 2023, at 1:30 PM GMT+1.
The forecast for the CAD Employment Change announcement is for an increase of 20,000 jobs.
The forecast for the CAD Unemployment Rate is reading an unchanged rate of 5.4%.
US Average Hourly Earnings m/m
In June 2023, average hourly earnings for all employees on private nonfarm payrolls increased by 12 cents, or 0.4%, reaching $33.58. This rise matched the previous month's advance but slightly exceeded market expectations, which had anticipated a 0.3% increase. Among private-sector production and nonsupervisory employees, average hourly earnings also saw a 0.4% growth, amounting to $28.83. Over the past 12 months, average hourly earnings displayed a consistent upward trend, increasing by 4.4% in June, the same pace as in May, and slightly surpassing market expectations, which had predicted a 4.2% rise. These figures indicate positive growth in earnings, reflecting the ongoing dynamics in the job market.
The next announcement for average hourly earnings is scheduled for Friday, August 4th, 2023, at 1:30 PM GMT+1.
The forecast for the August announcement is for an increase of 0.4%. This forecast is based on a survey of businesses by the BLS.
US Non-Farm Employment Change & Unemployment Rate
In June, the U.S. labor market added 209,000 jobs, bringing the unemployment rate down to 3.6% from the previous 3.7%. The job gains were slightly below economists' expectations of 225,000 and represented a slowdown from the previous month, which was revised down to 306,000. Sectors like government and health care saw significant job gains. Average hourly earnings rose by 0.4% in June, maintaining steady wage growth, with a year-on-year increase of 4.4%.
The next announcement for Non-Farm Employment Change & Unemployment Rate is scheduled for Friday, August 4th, 2023, at 1:30 PM GMT+1.
The forecast for the US Non-Farm Employment Change is 184,000.
The forecast for the Unemployment Rate announcement is for a rate of 3.6%. This forecast is based on a survey of businesses by the BLS.
Disclaimer: The market news provided herein is for informational purposes only and should not be considered as trading advice.