Investors and traders will be closely monitoring several key economic indicators for next week. Here are three market movers to keep an eye on, particularly if you’re trading the Canadian, American, and Chinese markets:
Bank of Canada Monetary Policy Decision – Wednesday 4th of September at 1:45 PM GMT
The Bank of Canada (BoC) decided in July 2024 to reduce its overnight rate to 4.50% from 4.75%. While the BoC acknowledged the recent moderation in headline inflation, it also noted that underlying inflationary pressures remain elevated.
Canada’s annual inflation rate experienced a further decline in July 2024, reaching 2.5%. This marks the lowest level since March 2021, down from 2.7% in June. The deceleration in inflation is a positive sign, indicating that price pressures are easing.
The central bank expressed optimism about the outlook for the economy, projecting a stronger rebound in growth in the third quarter of 2024. However, the overall economic forecast for 2024 was slightly downgraded due to a weaker-than-expected first quarter performance (1.2% vs 1.5%).
The BoC maintained its growth outlook for 2025 at 2.1%. Inflation projections were revised slightly downward for 2025 and 2026, reflecting the ongoing efforts to bring inflation back within the target range (2.0% vs 2.1%).
The decision from the BoC will be released at 01:45 PM GMT.
US Non-Farm Payrolls & Unemployment Rate – Friday 6th of September at 12:30 PM GMT
The US labour market experienced a significant slowdown in July, as nonfarm payrolls grew by only 114,000 jobs, after 179,000 jobs added in June.
The unemployment rate climbed to 4.3% in July, surpassing its previous high of 4.1% and reaching its highest level since October 2021. This increase has raised significant concerns about the possibility of an impending recession.
The rise in the unemployment rate aligns with the Sahm Rule, a widely used economic indicator. According to the Sahm Rule, an economy is considered to be in recession when the three-month average of the unemployment rate increases by half a percentage point above its 12-month low. This metric is often used to signal the onset of a recession.
Therefore, the current unemployment rate, coupled with its upward trajectory, has raised red flags for economists and market analysts, suggesting that a recession may be on the horizon.
The slowdown in the labour market adds to the mixed economic signals and has heightened concerns about the Federal Reserve’s response to the changing economic landscape.
The US job report for the month of August will be published at 12:30 PM GMT.
Chinese, American, & Canadian PMI Numbers
Chinese PMI
China’s manufacturing sector experienced a downturn at the beginning of the second half of 2024. The Caixin China General Manufacturing PMI fell to 49.8 in July, indicating a contraction in the sector for the first time in nine months.
A decline in new orders led to a slowdown in output growth, prompting businesses to reduce their purchasing activity. Despite this, employment levels remained relatively stable. On the pricing front, input costs eased, and increased competition led to a decrease in average selling prices. However, business confidence improved slightly during this period.
The data for the month of August will be published at 01:30 AM GMT.
American ISM Manufacturing PMI
The US manufacturing sector continued to contract in July 2024, with the Manufacturing PMI falling to 46.8 from 48.5 in June.
Weak demand, declining output, and a reduction in new orders contributed to the manufacturing sector’s contraction. While input costs remained relatively stable, prices charged by manufacturers rose slightly. The backlog of orders also remained unchanged, and employment levels declined.
Overall, the US manufacturing sector is facing headwinds, with the ongoing contraction indicating challenges in the face of weakening demand and rising costs.
The data for the month of August will be published at 02:00 PM GMT.
American ISM Service PMI
The Services PMI registered 51.4% in July, up from 48.8% in June. This indicates that the services sector remains in expansionary territory, despite the recent fluctuations. The resilience of the services sector highlights its ongoing strength and contribution to the overall economy.
The services sector in the United States continued to expand in July 2024, marking the 47th month of growth out of the past 50. This positive trend was only briefly interrupted three times, with two of those interruptions occurring within the last four months.
The data for the month of August will be published at 02:00 PM GMT.
Canadian Ivey PMI
The Canadian economy continued to expand in July, but at a slower pace than in previous months. The Ivey Purchasing Managers Index (PMI) fell to 57.6 from 62.5 in June, indicating a cooling in economic activity.
Despite the slowdown, the PMI remained above 50, signaling continued growth. The employment gauge rose, suggesting a strengthening labour market. However, inflationary pressures eased, with the prices index reaching its lowest level since March.
The data for the month of August will be published at 02:00 PM GMT.
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