Macroeconomics: The Day Ahead for 1 Sep 2023

Manufacturing PMIs/ISM and the US monthly labour market report dominate a busy schedule of statistics to get the new month underway. Outside of these, there are Japan’s Q2 CapEx (expanding at a much slower rate than expected, and implying a downward revision to Q2 GDP next week), and South Korea’s Trade, Indonesian and Swiss CPI to digest, while both Brazil and Canada publish Q2 GDP, and the US also has Construction Spending and Auto Sales. In events terms SARB’s Kganyago, BoE’s Pill, Atlanta Fed’s Bostic and IMF’s Gopinath hold a panel discussion at the SARB Research Conference, and there is also some Fed speak from Mester. Next week has the US closed on Monday for the Labour day holiday, with a relatively modest run of data that includes Services PMIs, US Non-farm Productivity and Fed Beige Book, China and German Trade, German Orders and Industrial Production, UK BRC Retail Sales, Japan Wages, Household Spending and revised Q2 GDP, Australian Q2 GDP and Canadian labour data. Both the RBA and Bank of Canada are expected to hold rates, and there will be a veritable deluge of central bank speakers.

** World – Aug Manufacturing PMIs/ISM **

– Yesterday’s China NBS Manufacturing PMI at least suggested there has been no further deterioration, while the rebound in today’s Caixin measure to its best level since February (51.0 vs. expected slip to 49.0 from July 49.2) implies a potential turnaround, though it will need to be sustained to evidence some genuine traction and a boost from the piecemeal support moves for the economy and the property sector specifically.  The question elsewhere is how other non-G7 Manufacturing (and the week after Services) PMIs fare relative to the broad weakness seen last week in the Eurozone, UK and US readings. The US Manufacturing ISM is expected to edge up, but at 47.0 vs. July’s 46.4, and with prices paid a key driver (forecast 44.0 vs. 42.6), this would hardly signal a turnaround for the sector.

** U.S.A. – August labour data, Auto Sales **

– The final piece of this week’s labour data jigsaw puzzle is on hand, with the renewed surge in Challenger Job Cuts adding to the looser demand profile suggested by JOLTS Job Openings and Consumer Confidence Labour Differential, notwithstanding Jobless Claims remaining low on any historical comparison. Payrolls are forecast at a slightly lower 170K (vs. 187K) and Private Payrolls seen at 145K (vs. 172K), and follow the provisional downward annual of revision 306K, with the Unemployment Rate expected to be unchanged at 3.5%. The Hollywood strike and the Yellow’s bankruptcy are expected to be a key drag on Payrolls, per se warranting some caution on interpreting any weaker than expected outturn. But the focus will be on Average Hourly Earnings, with the m/m rate seen easing to 0.3%, and y/y to 4.3%, and leaving the 3-mth annualized rate unchanged at 4.4%. If in line with forecasts, it would point to still solid labour demand, though not one which either helps or hinders the Fed’s inflation fight. Auto Sales are forecast to slip to 15.5 Mln SAAR from 15.74 Mln, well below pre-pandemic levels, but still supported by pent-up demand due to low pandemic era output, despite the rise in financing rates.