The week ahead: 3 - 7 June 2024
These are the Key Macro Events for the upcoming week.
US – The end of next week sees the release of May labor figures in the form of change in nonfarm payrolls, hourly earnings and the unemployment rate. We expect the unemployment rate to remain unchanged at 3.9% and hourly earnings to grow at 0.3% m/m, largely in line with the historical average. New jobs is expected to come in at 190k, slightly up from last month, but significantly below the exceptionally strong numbers in the first quarter of this year. The week also marks the start of the Fed blackout period preceding the June 12 FOMC meeting.
Eurozone – The ECB is widely expected to lower its key policy rates by 25bp, in the first of what is likely to be a series of rate cuts. As this is fully priced in by financial markets, attention will be focused on any clues for what happens next. Our base case currently sees the ECB following up with a further 25bp cut in July, but the upside surprise to core inflation on Friday combined with recent commentary from Governing Council members suggests a rising probability of a pause. The ECB will also update its economic projections. With developments evolving broadly in line with expectations since the last update in March, we expect only marginal changes to growth and inflation forecasts.
Germany – Industrial productionis expected to show further signs of bottoming out in April. The series however is highly volatile on a monthly basis. The German manufacturing sector is still in contractionary territory although recent figures provide some silver linings. Easing energy prices for instance have led to production increases in energy intensive industries. Overall demand for the sector is still weak, preventing a strong recovery in the coming months.
China – Caixin’s May PMIs due on Monday (manufacturing) and Wednesday (services) are expected to more or less stabilise at relatively high levels compared to the official PMIs published today (with the official manufacturing PMI having fallen back below the neutral 50 mark again after improvement seen in March/April). Meanwhile, annual growth of exports is expected to have accelerated in May, while annual import growth is forecasted to have slowed somewhat but to remain positive.