The Week Ahead - 3 - 7 February 2025

United States – Friday's labour market report headline figure is expected to be relatively solid, with non-farm payrolls increasing by 200k, against the backdrop of a significant, but anticipated, downward revision of the employment level. Last year's preliminary estimate of a downward revision of 818k will be incorporated as of this week's report. Further revisions to the survey extrapolation methodology could leave the December level between 900k and a million jobs lower than in the last December report we received at the beginning of January. This revision also leads to particular uncertainty about this month's NFP increase. The household survey will similarly be updated, and in contrast, will likely show an increase in the population due to higher net immigration. The unemployment rate might tick up to 4.2% as the initial signs of weaker government hiring (or active dismissal) are starting to show.

Earlier in the week we get ISM manufacturing, which we expect to inch up based on regional evidence, ISM services which is likely to stay in highly expansionary territory, and JOLTS job openings, which we expect to decline marginally to 8.05 million.

Eurozone – Flash HICP inflation is expected to hold steady in January. Headline inflation continues to see support from the rise in natural gas prices and – via the weaker euro – higher petrol prices. Core inflation will also see continued support from elevated services inflation, with a focus on whether insurers repeat recent sharp annual rises in premiums. The flash estimate from France today came in weaker than expected, driven by a surprise fall in services inflation, which suggests downside risks to our forecast.

UK – The Bank of England is widely expected to cut by 25bp. The Bank will also release updated forecasts in its quarterly Monetary Policy Report. We expect guidance on future rate cuts to remain non-committal given stubbornly high wage growth and sticky core inflation.

China – Following disappointing official PMIs for January earlier this week, Caixin’s PMIs to be published on Monday (manufacturing) and Wednesday (services) are expected to come out more or less in line with the previous readings, with the divergence between manufacturing (a bit above the neutral mark separating expansion from contraction) and services (clearly in expansion territory) continuing.