Thomas Watts comments on the economic data releases this week

by | Jul 4, 2023

Thomas Watts, Investment Analyst, abrdn, comments on the economic data releases this week.

He said: “The coming week signals the beginning of July, known as Quintilis (Latin for fifth) before it was changed in honour Julius Caesar back in 44BC, it being the month of his birth. It is with the number five in mind that we examine what the coming week has in store.

“Monday brings with it five key pieces of Purchasing Manager Index (PMI) data, detailing the results of a Survey asking businesses to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries and inventories. Covering both the manufacturing and services sectors for Germany, France, a European composite, the UK and US, the readings will give us an invaluable sense of the global economy at a company level.

“Not the fifth, but the fourth will be affecting markets on Tuesday as US markets close in observation of the 4th July, their Independence Day. We can expect trading volumes to be below their average all week as US market participants either take the week off or sit by the sidelines until normal service resumes next week. 

“It will be in the US however, where the bulk of the second half of the week’s economic data will come from. The middle of the week will see the US Federal Reserve release the minutes from their last meeting. After choosing to pause their rate hiking cycle last month at 5%-5.25%, but signalling that there is still a long way to go in their fight against inflation, the notes should make for fascinating reading. The minutes themselves will provide in-depth insights into the economic and financial conditions that influenced their vote on where they see interest rates going forward. 

“The week should be wrapped up with US non-Farm Payrolls, a key piece of information when determining the US central bank’s next rate move. The employment data itself will be accompanied by Average Hourly Earnings, allowing us to gauge future inflation expectations as the more consumers earn, the more they tend to spend. It all combines to be a vital piece of data for the Federal Reserve and should take on added significance considering the extra impetus put on such data going forward from Jay Powell and co.” 

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