Macroeconomics: The Day Ahead for 10 January

  • All eyes on US monthly labour report on light day for scheduled events; digesting Japan Household Spending, France Consumer Spending, Sweden GDP and Norway CPI, also awaiting India Industrial Production, Brazil inflation and Canada Unemployment; WASDE in focus for Agri markets
  • US: Payrolls expected to slow to recent average after choppy run of readings, contrast with slide in Household survey Employment in view; Unemployment Rate seen remaining steady, Average Earnings expected to remain a little hot
  • Recording of Gulf Intelligence ‘Global Energy Outlook 2025’: click here to view

EVENTS PREVIEW

The US monthly labour report tops a not particularly busy data schedule, and a near non-existent slate of scheduled events. There are Japan’s Household Spending, French Consumer Spending and Industrial Production and Norwegian CPI to digest, with Canada’s Unemployment, India’s Industrial Production and Brazilian inflation accompanying the USDA’s World Agricultural Supply & Demand Estimates (WASDE). Trump policy related concerns, ongoing concerns about UK govt policies and overnight news that China’s PBOC has been forced to suspend its bond buying programme due to a shortage of bonds in the local market will be the other talking points.

Next week brings a deluge of major data from China (Q4 GDP, Trade, Retail Sales, Industrial Production, Credit Aggregates), USA (CPI, PPI, Retail Sales, Industrial Production, NAHB & Housing Starts) and the UK (CPI, PPI, monthly GDP, Retail Sales, Industrial Production, RICS), as well as seeing the kick-off of the US (and many other countries) Q4 earnings season. Central Bank speakers will be plentiful and accompanied by the December ECB minutes, with energy markets looking to the EIA, IEA and OPEC monthly Oil Market Reports, while Brazil’s CONAB publishes its Corn & Soybean monthly S&D report.

** U.S.A. – December labour data **

– Payrolls have been volatile over recent months (227K, 36K, 223K and 78K) in part due to weather, strikes and other distortions, with the anticipated 165K rise essentially nothing more than an average for those past four months. Notably Household survey data suggest labour demand has been weak above all in October -368K and November -355K, which underlines the scale of the divergence in labour market signals. If Trump is true to his word on immediate action on immigration, Payrolls will likely be very choppy in coming months. The Unemployment Rate by contrast has been remarkably steady over the past 5 months, either 4.1% or as is expected today an unchanged 4.2%, while Average Hourly Earnings are expected to edge down to 0.3% m/m to leave the y/y rate unchanged at 4.0%, though the 3-month annualised rate would remin somewhat higher at 4.4%, perhaps a little too hot for the Fed’s liking. A close eye also needs to be kept on the Underemployment Rate, which at 7.8% in November remains 1.3% above the cyclical low of December 2022, though as with the headline Unemployment Rate has steadied over the past 5 months. While there will be market reaction to outliers, this is unlikely to be a game changer for the Fed, a) because it misread the soft labour market readings in Q3 2024, and more importantly b) being very wary of the impact of policy changes by the incoming government.

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