Thomas Watts, Investment Analyst, abrdn Portfolio Solutions, comments on the economic data releases this week;
“This week could well shape the tone for months to come, such is the confluence of important economic data that comes our way over the next 5 days.
You can’t get much more important than the Bank of England’s (BoE) Governor when it comes to setting domestic interest rates, with today bringing a press conference from Andrew Bailey himself. Speaking at Loughborough University, Bailey’s words will be heavily scrutinised by investors, with his public engagements often used to drop subtle clues regarding future monetary policy.
With investors having a job keeping up with all the news, the jobs market will aptly take centre stage on Tuesday, as the Office for National Statistics releases data covering most facets of the domestic employment landscape. The data will come in three parts, firstly showing the change in how many Brits were claiming unemployment-related benefits during the previous month. We will also see the change in average hourly earnings that were observed, and finally, the overall unemployment rate. All three pieces of data should blend together to give a comprehensive view of how the domestic labour market is looking, proving to be essential when judging how the BoE will act next in terms of rate setting.
Perhaps the most important data of the week arrives on Tuesday afternoon in the US, with much anticipated Inflation numbers being made public. With the chances of a rate cut during March in the US almost entirely ruled out, after a slew of strong economic data readings, a strong Consumer Price Index (CPI) print could ignite worries that the chances of a May rate cut could be heading the same way. However, if we see weaker prices rises, we could see markets react very positively as hopes around continued rate cuts during 2024 gather pace.
Its back to domestic shores for the remainder of the week as we receive our own inflationary reading here on Wednesday as well as month on month Gross Domestic Product (GDP) are released. Helping us to understand if the UK economy is slipping towards recession, the data acts as the broadest measure of economic health, detailing the change in the total value of all goods and services produced by the economy.”