August 2023 has been packed with crucial economic releases, including earnings reports from companies like NVIDIA (NVDA) and Peloton (PTON), CPI in the US and UK, and news about China's economy among other data. These figures may have helped both traders and consumers understand how the global economy is faring.
As the month concludes, the last week of August 2023 continues this trend of information-rich releases. Accordingly, this week, a myriad of financial data is set to be released from CPI to PMI and PCE. So, here’s what you may want to keep in mind for the upcoming week:
US Update: Powell’s Jackson Hole Speech, PCE & Jobs Reports
Traders may be headed this week with a new understanding of the world’s biggest economy’s near-term trajectory due to Fed Chair Jerome Powell’s at the Jackson Hole Symposium (JHS). On Friday, August 25, Powell disclosed that the US central bank is “prepared to raise interest rates further,” thereby reinforcing the expectations of further Fed hawkishness. Powell also explained that the Fed is “attentive to signs that the economy may not be cooling as expected.”
However, there are other data points traders can keep track of this week to understand further where the Fed will be headed in the near future as its meeting on September 19-20 approaches. This is because, this week, the US Personal Consumption Expenditures (PCE) index, deemed one of the Fed’s favorite inflation gauges is scheduled to be released on Thursday. In addition, US jobs data for August will be published on Friday.
According to some analysts, Thursday’s core PCE, which excludes food and energy, is expected to show a rise of 0.2% in July. In addition, Friday’s jobs data is expected to show a rise of 168,000 in jobs in July as unemployment rates remain at 3.7%.
Some economists seem to believe that Friday’s labor figures may contribute to the potential increase in inflation and the associated risks. Furthermore, Powell also stated that the Fed will weigh the US labor market’s progress as he said that "evidence that the tightness in the labor market is no longer easing could also call for a monetary policy response.” (Source:Yahoo Finance)
Traders will have to wait and see how the world’s biggest economy will perform in light of the upcoming releases and what monetary policies the Fed will adopt in response during September’s meeting.
CPI: What Is Inflation Like in Australia & the Eurozone?
Besides the US, Wednesday’s Australian CPI and Thursday’s Eurozone flash CPI can also be important indicators of global economic conditions.
In Australia, July’s CPI numbers are projected to indicate a moderation in inflation, with the expected inflation rate easing from June's 5.4% to 5.2%. Nonetheless, despite the easing, it appears similar to Powell’s latest remarks, in the latest RBA (Reserve Bank of Australia) meeting, RBA Governor Philip Lowe revealed that “some further tightening of monetary policy may be required.”
The RBA is scheduled to reveal its rate decision on September 5, 2023, and it may be interesting to see how the CPI data will affect it.
Moreover, the Eurozone’s August YoY flash Consumer Price Index (CPI), is projected to decline to 5.1% from 5.3%. According to Moody’s analysts, the anticipated decline in headline inflation may be exacerbated by decreases in food and core inflation.
Aside from the CPI, this week’s ECB Minutes can also provide clues about the Eurozone’s economic trajectory ahead of the ECB’s meeting on September 14.
China PMI: Is the World’s Second-Biggest Economy Still Struggling?
It is no secret that the Chinese economy has experienced a tumultuous journey this past year as it entered deflation while its labor and property markets struggled. This struggle is also reflected in Evergrande, China’s second-biggest real estate developer, losing over 99% of its value over the course of the past 3 years. As a result, Evergrande has now been deemed “the world’s most indebted real state developer,” and on Sunday, the firm revealed that it lost $4.5 billion in the first six months of 2023, demonstrating China’s economic troubles.
Still, there may be more data that traders may want to consider before making a decision as to how to approach the Chinese markets this week, as the Chinese NBS Manufacturing PMI figures are set to be released on Thursday.
The PMI is expected to come in higher at 49.5 in August compared to July’s 49.3. Still, despite the slight uptick, it is believed that the PMI will remain “in contraction territory.” Only time will tell whether these predictions will come to fruition.
If the past couple of months’ economic releases did not provide traders with the answers they may have been seeking regarding the economy, this week’s data may be what they were looking for. As such, keeping a keen eye on the results and monitoring how the markets will respond may be helpful to understanding the near-term economic trajectory as the year nears its end.