Macroeconomics: The Day Ahead for 3 May

The US monthly labour data, accompanied by Services ISM and some Fed speak will dominate the day’s trading, with UK final Services PMI, weak French Industrial Production and Turkish CPI also on tap, along with the UN FAO Food Price Index. Norway’s central bank is expected to hold rates again at 4.50%, and may perhaps push back a little on prior guidance suggesting an initial rate cut in September, given recent NOK weakness has been greater than the central bank had been forecasting.  A lighter day for corporate earnings features some European banks (Credit Agricole, Intesa SanPaolo, & Societe Genrale) along with CBOE, CBRE, Cheniere Energy and Hershey in the US. Next week is very short on major US data, but elsewhere the UK has provisional Q1 GDP and the usual run of activity indicators, RICS House Price Balance, Construction PMI and REC Employment survey. China looks to Trade, Germany to Factory Orders, Trade and Industrial Production, France to Q1 Wages, Japan has key wages and Household Spending, and Canada to labour data. The RBA and BoE are both expected to hold rates, but possibly signal a rate cut is close at hand, while Brazil’s BCB and Banco de Mexico are expected to continue with rate cuts, and the Fed publishes its quarterly Senior Loan Officers survey. In the commodity space, the US EIA publishes its monthly Short Term Energy Outlook (STEO) and the the week ends with the monthly USDA WASDE and China CASDE reports.

** U.S.A. – April Payrolls, Unemployment **

– Headline Payrolls are expected to slow to a still very lofty 250K (vs. March 303K), with 198K seen for Private Payrolls, while the Unemployment Rate is expected to be unchanged at 3.8%, and probably most sensitively Average Hourly Earnings are forecast to be unchanged at 0.3% m/m, implying a 0.1 ppt dip in the y/y rate to 4.0%, still too high for Fed comfort, but at least easing, and it would also the 3-mth annualized rate on earnings fall to 3.2% from 4.0%. The labour force participation rate is seen holding at 62.7%, just below last year’s peak of 62.8% and still below pre-pandemic levels, and a close eye needs to be kept on the Underemployment Rate, that has inched up to 73.%, any further deterioration would perhaps be the most concreate sign of labour market loosening. Weekly jobless claims have been little changed since the end pf February, suggesting a fairly steady Payrolls reading, while the correlations between the slightly stronger than expected ADP measure and the official data have long broken down completely, though the drop in JOLTS Job Openings and the Beige Book commentary on the labour markets suggest a slow down, but that is already assumed in the consensus estimate.