Macroeconomics: The Week Ahead: 31 March to 4 April 2025

The Week Ahead – Summary preview:  

t is probably fair to say that the world will be happy to see the back of a tempestuous Q1, but anticipates that a continued fog of uncertainty along with very elevated trade and geopolitical tensions will prevail for Q2, and doubtless beyond. The end of Ramadan Eid-Al-fitr holiday will thin markets in Asia, the Middle East and Africa at the start of the week, while greater China has the Ching Ming Festival (aka Tomb Sweeping day) to end the week. 

The data schedule for the week has a very familiar start of month feel with Eurozone inflation, PMIs and Japan’s Q1 BoJ Tankan dominating the start of the week, while US labour data (JOLTS, ADP, Payrolls) will be the focus for the remainder of the week. But all eyes will be the US announcements on ‘reciprocal tariffs’ on Wednesday 2 April, which will inevitably be fairly chaotic, both given the long list of back-and-forth implementation throughout Q1, and the likelihood of a myriad of exceptions. The latter will have to be inspected with a fine-tooth comb, and also taken with a pinch of salt, given the potential for more reversals within hours, days or weeks that have been witnessed thus far. US Auto tariffs will be implemented as of Thursday 3rd, and while the world has been very good at forgetting many of the lessons from pandemic era supply chain disruptions, the most important lesson was that this will be inflationary for both new cars (including domestically produced) as well as ‘used’. On the central bank front, Australia’s RBA is expected to hold rates at 4.1%, after March’s initial 25 bps rate cut, but leave the door open for further cuts, while Fed and ECB speakers will be plentiful, and the ECB will publish the ‘account’ (minutes) of its March meeting. Outside of trade tensions, the geopolitical focus will be on an EU defence ministers meeting, as well as the first meeting of NATO defence ministers since the US administration took office in January, a meeting that is likely to be challenging for Secretary General Rutte to maintain some form of order and cohesion.

In the energy and commodity space, OPEC+ is scheduled to start restoring some of its mothballed output, while metals markets look to Rio Tinto’s AGM, the precious and base metals Mining Forum Europe in Switzerland, and the Antaike Bauxite & Alumina market conference in China. In the agricultural space, the USDA’s annual Acreage Prospective Planting data for Corn, Wheat, Soybeans, Barley, Canola, Oats, Rice and Cotton will be in the spotlight, along with the week ending UN FAO’s World Food Price Index and monthly grains report.

– U.S.A.: The Manufacturing ISM is expected to echo the sector PMI with a drop to 49.5 from 50.3, also in line with regional Fed surveys showing orders, shipments and employment dropping back, though of particular note will be whether rising prices paid are also seeing pass through to output prices. the ISM Services is expected to be unchanged at 53.5, but Prices Paid to continue a sharp shift higher to 64.2, after hiting a near 3-yr high of 62.4 in February. There is scope for a further recovery in Auto Sales from January’s storm and wildfire related 1.2 Mln SAAR slide to 15.6 Mln, though the consensus sees no change from February’s 16.0 Mln. The run of labour indicators are forecast to show JOLTS Job Openings easing marginally to a 7.68 Mln pace, and a drop in the Quits rate, while ADP Employment is seen at 120K vs. February’s 77K. Friday’s Payrolls are forecast to ease fractionally to 138k from 151K, and Private payrolls to slips to 130K from 140K, with an elevated risk of an outlier both given the reversal of some DOGE layoffs, unwind of January / February storm impacts and some anecodtal evidence of improved hiring. The Unemployment Rate at 4.1%, Average Hourly Earnings at 0.3% m/m 4.0% y/y and Participation Rate at a lowly 62.4% are seen unchanged vs. February. Truth be told, the impact of govt policies will show up in official data very unevenly over coming months, for example a good number of govt layoffs may not show up until H2 2025, as employees will remain on payrolls until then. Per se it is much too early to evaluate the extent of the disruption from govt policies.

– Europe: Eurozone PMIs are as usual not expected to be revised from flash readings, which saw manufacturing continue a steady Q1 improvement to a still contractionary 48.7, while Services continued a gradual setback to 50.4. But the focus will be on preliminary CPI, with a seasonally typical rise of 0.6% m/m implying a 0.1 ppt slip to 2.2% y/y, and Core CPI also expected to dip to 2.5% from 2.6%. Energy price base effects (both utilities and road fuel) should on balance be a drag, with some modest assistance from food, but more importantly there should be a further slowdown in services inflation, as leisure, hospitality and travel prices continue to ease. This would make the case for a further ECB rate cut in April stronger, as even the more hawkish council members seem willing to concede in recent comments. German Orders have been especially volatile in recent months on the back of Capital Goods (aircraft, freight and industrial machinery) fluctuations, with a 3.5% m/m rebound expected following January’s drop of -7.0%. The bigger question is how the EU will respond to the reciprocal tariffs imposed by the US. The week’s run of UK data is rather second division with Consumer Credit expected to mean revert to a a very average £1.0 Bln after January’s spike to £1.7 Bln, while Mortgage Approvals seen holding up at 65.6K, though this would still be the lowest reading since August, while base effects are set to push the BRC Shop Price Index up to -0.4% y/y from -0.7%, underlining that retails goods prices remain very subdued

– Japan: Monday’s Industrial Production is expected to rebound 2.0% m/m from January’s -1.1%, paced by semiconductors and auto output, the latter likely paced by attempts to front run tariffs. The accompanying Retail Sales is expected to slip -0.2% m/m but remain solid at 2.5% y/y and continuing to reflect strength in tourists spending, and likely to contrast heavily with a sharp -0.8% y/y drop in Household Spending, underlining the oft made point that domestic private consumption remains tepid, despite strong gains in wages. Tuesday’s Q1 Tankan is forecast to show the Manufacturing DI slip to 12, and the Outlook to 9 from 13 reflecting concerns about trade tensions and the global economic outlook, and above all in a sharp slide in All Industry Capex Expectations to 3.1% from 11.3%, though there is a strongly seasonal element to this too. By contrast the Non-manufacturing DIs are seen holding up at high levels at 33 and 29 respectively, and again boosted by record numbers of tourism arrivals

– There are three S&P 500 companies reporting this week, with worldwide corporate earnings highlights as compiled by Bloomberg News likely to include: Dollarama, Foshan Haitian Flavouring & Food, Jiangsu Hengrui Pharmaceuticals, Kweichow Moutai, PetroChina, Seres Group.