Macroeconomics: The Day Ahead for 7 July

The US monthly labour market report stands tall over today’s proceedings, with Japan’s much stronger than expected wage growth and much weaker than forecast Household Spending, German Industrial Production, Norwegian and Swedish monthly GDP to be digested, and Canada Unemployment also on tap. There are a few ECB and BoE speakers, and Poland’s NBP publishes the minutes of this week’s policy meeting ahead of the regular post meeting press conference with governor Glapiński. Next week’s schedule is replete with major data, with US and China CPI and PPI, UK labour data, monthly GDP and activity indicators and BRC Retail Sales, the US also has the NFIB and Michigan Sentiment surveys, while Japan looks to Machinery Orders. On the central bank front, the Bank of Canada is expected to hike rates a further 25 bps to 6.0%, with the Bank of Korea seen on hold at 3.50%, the Fed publishes its Beige Book, and the BoE its Q3 Credit Conditions survey. In the commodity space, the EIA and IEA publish their monthly Oil Market Reports, which will be accompanied by the USDA WASDE report. The week will end with the start of the US Q2 earnings, as the usual run of banks and other financials report.

** U.S.A. – June Labour data ***
As is well known the read across from the ADP Employment estimate to Payrolls is a poor one. But given that yesterday’s 497K ADP rise was the largest monthly rise since February 2022, and larger than any in the decade prior to the pandemic, it certainly skews the risk to the upside of the consensus estimate of 225K for Payrolls, and to the downside of the expected dip in the Unemployment Rate to 3.6% from 3.7%. Average Hourly Earnings are seen steady at 0.3% m/m which would bring the y/y rate down 0.1 ppt 3.6%, which is also the 3-mth annualized rate, and still slightly above the Fed’s comfort zone, but also confirming that wage pressures remain modest. For all that the Payrolls data have been robust, and the Unemployment Rate remains close to its low, the Labour Force Participation Rate has been stuck at 62.6% for some months, and the Underemployment Rate has been rangebound since June 2022.