The July employment report showed that U.S. employers had significantly reduced hiring and the unemployment rate rose for the fourth month in a row, a key recession indicator that contributed to a sell-off in stock markets around the world.
If the consumer price index (CPI) comes in as expected, it would suggest that inflation is still declining. Economists expect a slight rebound after June’s surprisingly low reading. They expect the turnaround to come mainly from so-called core services (excluding housing) – a key category watched by policymakers. Some forecasters also warn of upside risk to commodity prices amid higher shipping costs.
However, the decline in housing costs that has been ongoing since June is likely to continue. This category accounts for about a third of the overall consumer price index and is an important factor in the overall inflation trend.
The Producer Price Index, released one day before the Consumer Price Index (CPI), is examined for categories that go into the Fed’s preferred inflation indicator, the Personal Consumption Expenditures Price Index.
Another report next week is expected to show an increase in retail sales overall in July, but if certain components are removed to determine the control group – which is used to calculate gross domestic product – sales are likely to fall noticeably.
Other data on the agenda include the latest data on inflation expectations, small business sentiment, industrial production and new home construction. Regional Fed Presidents Raphael Bostic, Alberto Musalem, Patrick Harker and Austan Goolsbee will deliver presentations.
In the north, housing starts in July will show whether the Bank of Canada’s successive interest rate cuts are helping to boost investment in new construction. Canadian wholesale and manufacturing sales are expected to decline in June.
Other highlights include key data from the UK – from wages to inflation – manufacturing and retail figures from China, and likely decisions on maintaining interest rates in Norway and New Zealand.
The flood of data from China on Thursday is likely to show that the economy performed slightly better in July than in June, but is still largely making sluggish progress.
Growth in industrial production is expected to have accelerated to 5.5 percent, but this pace is still slow enough to drag the annual balance down somewhat.
The same applies to retail sales, which are expected to increase to 2.6 percent, while the seven-month pace will slow to 3.5 percent. Investment in fixed assets is expected to remain stable, while the decline in real estate investment is expected to ease.
The country’s credit growth is expected to have slowed in July, despite a rate cut by the People’s Bank of China and a reduction in benchmark interest rates.
Elsewhere, Japan’s GDP is expected to have recovered in the second quarter, growing by 2.3 percent year-on-year, and second-quarter GDP figures are also available from Taiwan and Kazakhstan.
Australia will release figures on wages and price levels, consumer confidence and the NAB business confidence survey on Tuesday.
Consumer inflation in India is expected to fall below 4 percent in July, while industrial production growth may have slowed in June. Trade statistics from India and Indonesia are expected.
The Reserve Bank of New Zealand is expected to leave its key interest rate at 5.5 percent at its meeting on Wednesday, but a cut is not ruled out. Central bankers in the Philippines will meet a day later.
The focus is on the UK, where the Bank of England received four days of economic releases – in the same month it made its first interest rate cut and signalled that more will follow.
Among the most telling data is likely to be data due on Tuesday showing a slowdown in wage growth. However, inflation will also be closely watched the following day for any indication of ongoing pressures, particularly in the services sector, which is expected to appear as price growth remains above 5 percent.
Monthly GDP is expected to show little growth in June on Thursday, although second-quarter manufacturing released the same day could increase by 0.6 percent. On Friday, retail sales for July are likely to show an increase after falling the previous month.
The Nordic countries are also likely to be in focus, especially Norway. Norges Bank is expected to keep its interest rate at 4.5 percent on Thursday, in line with its more aggressive stance in June, when central banks effectively postponed monetary easing until 2025.
Core inflation has eased faster this year than the authorities had forecast. However, the energy-rich economy has also coped better than expected with the highest borrowing costs since 2008. Wage pressure remains high and the labor market situation has weakened only slightly.
Against this backdrop, investors will be looking for signs of concern about the krona, which has been the worst performing G10 currency so far this year.
In Sweden, data on Wednesday will show whether inflation in the largest Nordic economy slowed further in July, providing important insights for policymakers who are widely expected to continue with monetary easing this month after previously announcing up to three interest rate cuts in the second half of the year.
Inflation figures will also be released in Denmark and the Czech Republic on Monday, while second-quarter GDP figures are expected in Poland on Wednesday and Switzerland on Thursday.
The eurozone will have a relatively quiet week. Key releases include Germany’s ZEW investor confidence index on Tuesday, and eurozone industrial production and Dutch GDP on Wednesday. European Central Bank officials are mostly on vacation, and much of southern Europe will have Thursday off.
And further south: Zambia is expected to raise interest rates for the seventh consecutive time on Wednesday to curb double-digit inflation and support the kwacha.
On the same day, Namibia will keep its interest rate at 7.75 percent, matching South Africa’s unchanged stance from last month. The Namibian dollar is pegged to the rand, meaning monetary policy is often dictated by the actions of the South African central bank.
Nigerian data released on Thursday is expected to show that inflation fell for the first time in 19 months, helped by favourable year-on-year comparisons and measures to reduce food costs, including a 180-day period for duty-free imports of wheat and maize.
Also on Thursday, inflation in Israel is likely to rise to 3.1 percent in July, forecasts show, as the war in Gaza weighs on the economy and government spending soars. That would put inflation above the 1-3 percent target range for the first time since November.
Argentina is due to release inflation data for July. Economists surveyed by the central bank expect monthly inflation to slow to 3.9 percent from 25.5 percent in December. Annual inflation could slow for the third month in a row to around 263 percent.
In addition, the Argentine Ministry of Economy will announce its budget balance for July. The country has currently been running surpluses for six months.
The central banks of Brazil, Colombia and Chile will publish surveys of economists’ expectations next week. Chile will also publish a separate survey of traders who correctly predicted the Banco Central de Chile’s interest rate pause on July 31.
Uruguay’s new central bank governor Washington Ribeiro and his colleagues may leave the key interest rate at 8.5 percent after inflation rose slightly to 5.45 percent in July. Inflation has been within the bank’s target range of 3 to 6 percent for the past 14 months.
Brazil, Peru and Colombia will release proxy GDP data for June; Colombia will also release production figures for April and June.
All three economies grew faster than expected in April and May, ensuring positive growth for the entire second quarter.
Since the collapse in mid-2023, Colombia’s economy has recorded quarter-on-quarter growth of 1 percent and 1.1 percent, respectively. Annual forecasts range from 2.8 to 3.3 percent.
