Events to Look Out for Next Week

Andria Pichidi

August 25, 2023

Inflation is coming down but while headline rates are dropping thanks to base effects, services price inflation in particular looks sticky. Still, there are now more signs that previous rate hikes are feeding through the system. And, with policy settings curtailing growth, September decisions remain wide open. Next week’s agenda is crucial as it includes key inflation reports which will likely be key for the September decision. US Consumer Confidence and Non-Farm Payrolls are the highlights of the week.

Monday – 28 August 2023

United Kingdom – Bank Holiday
Retail Sales (AUD, GMT 01:30) – The August Retail Sales in Australia is anticipated to contract at -0.8% m/m from -0.7% m/m.

Tuesday – 29 August 2023

CB Consumer Confidence (USD, GMT 14:00) – Consumer confidence is expected to ease to 115.0 after a surge to a 2-year high of 117.0 in July, versus a 6-month low of 102.5 in May and a 17-month low of 95.3 in July of 2022. We expect the present situation index to fall to 157.0 from a 40-month high of 160.0, versus a 19-month low of 138.3 in November. The expectations index is expected to fall to 87.0 from an 18-month high of 88.3, versus a 9-year low of 65.3 in July of 2022. We’ve seen a modest confidence updraft since mid-2022, though all of the measures have deteriorated sharply from mid-2021 peaks.

Wednesday – 30 August 2023

Consumer Price Index (AUD, GMT 01:30) – The annual inflation rate in Australia dropped to 5.4% in May and while the RBA signalled that more rate hikes may be necessary in the future, the focus for now seems to be on monitoring the impact of previous hikes.
ADP Employment Change (USD, GMT 12:15) – July strength reflected a huge 303k rise for private service jobs, led by a solid 201k increase for leisure and hospitality. We saw the largely expected 21k goods sector payroll gain, with increases of 48k for mining and 9k for construction, but a -36k drop for manufacturing. We now have four consecutive months of big ADP gains, which suggests upside risk for Friday’s report.
Gross Domestic Product (USD, GMT 12:30) – The Q2 GDP is expected to grow to 2.5% from 2.4% which includes hikes of $10 bln for consumption, $6 bln for public construction, $3 bln for nonresidential investment, $2 bln for residential investment, and $3 bln for both exports and imports, but trimmings of -$15 bln for inventories and -$4 bln for intellectual property investment. The advance Q2 data revealed a respectable 1.9% pace for final sales and a nearly-flat inventory path, after a similar mix in Q1, leaving growth in early 2023 that defied widely-held recession fears as recently as late 2022.

Thursday – 31 August 2023

Event of the Week – Non-Farm Payrolls (USD, GMT 12:30) – A 160k August Non-Farm Payroll increase is anticipated, after gains of 187k in July, 185k in June, and 281k in May. Initial claims have bounced in August after a temporary recovery in July, but continuing claims remain tight. We assume a 5k factory jobs rise after a -2k July decrease. We expect the jobless rate to hold steady at 3.5% from July, versus a 54-year low for the two-digit rate of 3.43% in January. Hours-worked are assumed to rise 0.1% after a -0.2% July dip, while the workweek holds steady at 34.3. Average hourly earnings are assumed to rise 0.4%, after a 0.4% gain in July, while the y/y wage gain should hold at 4.4% for a third month.
ISM Manufacturing PMI (USD, GMT 14:00) – The ISM index is expected to rise to 46.6 from 46.4 in July and a 3-year low of 46.0 in June. We saw an 18-year high of 63.7 in March of 2021, an 11-year low of 41.6 in April of 2020, and an all-time low of 30.3 in June of 1980.

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Andria Pichidi

Market Analyst

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