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Macroeconomics: The Day Ahead for 4 November

  • US labour report tops modest end of week schedule, digesting German Orders slide, UK Auto sales jump, French Production; awaiting Eurozone Services PMIs and Canada labour data; BoE and ECB speakers; further smattering of US earnings
  • US Payrolls seen slowing to pre-pandemic average pace as weak seasonal hiring weighs, Unemployment Rate to remain very low, but tick higher, Underemployment Rate to underline still very tight labour market
  • US Average Hourly Earnings growth clearly slowing, even if above l-t trend; but also implies bigger squeeze on household incomes

EVENTS PREVIEW

As is usual, the first week of the month ends with US labour data as its highlight, with Germany Factory Orders (sliding 4.0% m/m, much more sharply than the expected 0.5% m/m) to digest ahead of UK Auto Sales, Eurozone Services PMIs, the UN FAO World Food Price Index as well as Canadian labour data. ECB speakers are again abundant with BoE and Fed speakers also scheduled, and a more modest run of US corporate earnings. Given another bruising encounter with central banks this week, markets may well be happy to “shut up shop” early, and be somewhat indifferent to the US labour data barring a substantial outlier. Next week brings the key US Mid-Term Elections, with US CPI, China Trade, CPI, PPI and monetary aggregates and UK Q3 GDP and monthly activity data topping the run of statistics in a week without major central bank meetings, though there will be plenty of central bank speakers. Agricultural commodities will above all be waiting for the US monthly WASDE, with China’s CASDE, Brazil’s CONAB and Unica Sugar monthly S&D reports also due.

** U.S.A. – October labour data **
Payrolls growth is expected to slow again to 200K (vs. Oct 263K), with Private Payrolls also seen at 200K (vs. 288K), which from a longer-term perspective would still be indicative of healthy labour demand, but also likely reflecting a slow pace of seasonal hiring, as the likes of Amazon are anticipating the ‘slowest holiday shopping season ever’. Weekly Jobless Claims suggest that there should be no noticeable impact from Hurricane Ian. The Household survey is forecast to show a 0.1 ppt increase in the Unemployment Rate to 3.6%, but the focus will be more on the Underemployment Rate which remains at an all-time low of 6.7%, underlining how tight the labour market remains. Average Hourly Earnings are seen posting a third consecutive m/m gain of 0.3%, i.e. a 3-mth annualized rise of 3.6%, still high in comparison to pre-pandemic levels, but well below the 5.0% plus pace seen over much of the recovery. This is obviously a double-edged sword, in so far as it offers some comfort to the FOMC in its inflation battle, but on the other hand, puts a bigger squeeze on household incomes.

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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.

ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.                  

A subsidiary of Archer Daniels Midland Company.

© 2021 ADM Investor Services International Limited.

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