MNI Global Week Ahead - UK Labour Market Data In Focus

See below for the key events in developed and emerging markets next week:

THROUGH THE WEEK - China Data

China will release some key data over this coming weekend in the October CPI and PPI.  Both have been mired in deflation and with the pick up in some parts of the economy, officials will watch closely to see for any improvement.  Following last month's decline of -2.3%, PPI is forecast at -2.2% whilst CPI is forecast at -0.1% from -0.3% prior. Elsewhere, China will release data on home prices, retail sales and industrial production.  Home prices have been in deflation since 2023 and whilst there is little to no expectations for a return to rising home prices, signs of improvements could positively impact sentiment.  The consumer is one of the primary focus for the government and the policies to come for the next 5-year plan, giving the retail sales release for October greater importance.  September saw an increase of +3.0% and October is expected to moderate back to +2.7%, still trailing the 3-Yr average.  Industrial Production in September topped estimates at +6.5% in what many observers saw as ramping up production ahead of the Xi Trump summit in Korea.  The 3-Yr average is +5.7% and current forecasts suggest the October result will moderate back towards that level.  India will see the release of the October CPI.  Deflationary pressures that have been evident throughout the Asia region appear to be moderating, yet for India it remains a problem.  Against a central bank target of 4% September's decline to 1.54%.  Whereas last year's food prices drove inflation higher, this year's better than expected rains are doing the opposite and October's forecast of 0.4% would reach the lowest since records began.

TUESDAY - UK Labour Market Data

Governor Bailey has put a December rate cut in play and consequently UK labour and CPI data has become even more important than it was before. Private regular pay data will likely be of most importance, particularly after coming in below expectations in August. The headline 3-month data came in at 4.42%Y/Y but the single month print saw a slowdown to 4.21%Y/Y in September (versus 4.51% in July and 4.55% in June). If we see another similar single month print, that would see a 4.3%Y/Y headline 3-month print in September. An early consensus is split between 4.2% and 4.3%. The BOE's November MPR staff projection looks for 4.23%Y/Y (revised down from the 4.62%Y/Y forecast from the August MPR). HMRC RTI payrolls and LFS data both also have the potential to surprise and move the market too, but it is the private regular wage data that should be most impactful.

TUESDAY - The First Known-Ahead-Of-Time Publication Of Weekly ADP Data 

It’s a quieter week for US data ahead, probably highlighted by the weekly ADP series after its first publication a week ago. That first week of data appeared to give a reasonable steer on this week’s monthly report for October but we’ll be watching the extent of any revisions in addition to broader trends. Elsewhere, state-level weekly jobless claims should also remain high on a watchlist for any signs of a push higher after job cut announcements in this week’s Challenger report spiked to their highest for an October since 2003, surpassing Oct 2008. For now, latest data point to a healthy level of initial claims although continuing claims have passed back towards cycle highs seen in the summer. A break above this range, with the typical caveat that each latest week tends to be revised lower, would be notable.  

WEDNESDAY - South Africa Medium-term Budget Policy Statement

The Medium-Term Budget Policy Statement (MTBPS) is expected to emphasise fiscal consolidation and a growth-oriented policy stance. Finance Minister Godongwana should signal a better fiscal condition amid a narrower budget deficit and improving primary surplus. Godongwana may also use the opportunity to provide updates on the proposed fiscal anchor and the overhaul of the inflation-targeting framework after the SARB already shifted its implicit inflation objective to the lower end of the official target range. Furthermore, recent weeks have seen GNU members point to a more consensual nature of the budget process, in contrast with the political turmoil surrounding the adoption of the 2025 National Budget.

THURSDAY - BCRP Decision (Peru)

With the policy rate already very close to neutral and growth around its potential rate, the BCRP is more likely to lean towards remaining on hold at 4.25% in November. Previously, Governor Velarde has also said that there is no need to be aggressive with rate cuts. However, the decision looks like being a close call, after recent softer-than-expected CPI data left headline inflation close to the bottom of the 1-3% target band, and some analysts still see scope for a 25bp cut to 4.0% at this meeting.

FRIDAY - Eurozone Q3 GDP (2nd Release)

Eurozone Q3 GDP is expected to confirm flash estimates at 0.2% Q/Q on Friday. There will be more interest in the first read of quarterly employment and real productivity per employee growth. The ECB projects employment growth at 0.1% Q/Q, with real productivity per employee expected to grow 0.5% Y/Y. After showing tentative signs of returning to its pre-covid trend  in 2022-2024, Eurozone employment growth has started to level off in recent quarters. If this dynamic persists, the onus will fall on productivity to fuel additional GDP growth - something the region  has been lacking since the pandemic. The data is unlikely to shift ECB rate path expectations. Markets currently retain a light easing bias, but the bar to another cut looks to be increasing.

Note: US Government shutdown ongoing, meaning any Government-compiled US statistics will not be released.