Global Economic Updates: CPI, GDP, Retail & More

More economic data and events are scheduled to occur this week and can offer crucial insights into the current state of the economy and illuminate the potential trajectory of the markets in the coming months.

Against the backdrop of escalating economic uncertainty and geopolitical tensions, these events can hold particular significance for traders, investors, and consumers alike.

From Canada to the United States and China to the United Kingdom, here are the key events shaping this week's economic landscape:

How’s the Largest Economy’s Retail Sector Performing?

The retail sector can reflect how economic conditions such as inflation and ensuing interest rate hikes affect consumer spending. In addition, Retail Sales can help detect inflationary headwinds and reflect a country’s economic health. 

Moreover, generally speaking, this data can shift the markets as higher sales can potentially benefit retail companies’ shareholders, as it can sometimes indicate stronger earnings reports. Nonetheless, it is important to keep in mind that the markets are volatile and can be unpredictable and that past performance does not necessarily reflect future results. 

As such, given this indicator’s importance, traders and analysts may want to tune in for this week’s US Retail Sales data which are due to be released on Tuesday, October 17. 

The anticipated September data on US Retail Sales is projected to indicate a 0.2% MoM increase, marking a slowdown from August’s 0.6%. In addition, the core measure is expected to show a 0.1% MoM rise.

According to Bank of America (BAC) analysis, “while there has been a relative deterioration in labor conditions at the higher end of the market, most of that underperformance may now be in the past." Nonetheless, the bank also highlighted the fact that higher-income households’ growth in wages and salaries is still lagging behind the rates seen in other groups.

As we near the holiday shopping season, and with certain retailers like Amazon (AMZN) and Walmart (WMT) already experiencing the onset of holiday shopping festivities, monitoring retail data could provide valuable information about what possibly lies ahead. (Source:Washington Post)

Is China Still Facing Economic Headwinds?

Besides the US, this week marks an important one for China, the world’s second-biggest economy, as key information ranging from GDP to Retail Sales and Industrial Output is expected to be released on Wednesday, October 16. 

According to some analysts, China’s Q3 Gross Domestic Product (GDP) is expected to reach 4.4% below Q2’s 6.3%, while the QoQ forecast stands at 1%. Generally speaking, higher GDP rates can indicate economic expansion while lower GDP rates can show economic shrinkage. Still, the outcome of Wednesday's data is yet to be determined.

As for China’s Retail Sales, as reported by Reuters, the forecast for September is 4.5% compared to the previous 4.6% in August, while the Industrial Output is anticipated to be 4.3% which is down from the previous 4.5% in August.

Still despite these softer outlooks and this year’s economic headwinds, some analysts posit that in Q4 China’s economy is likely to expand “with consumption recovery momentum continuing to strengthen, investment growth rising from a decline, and the dragging effect of external demand on economic growth also easing.” Furthermore, they predict that its suffering real estate market will also stabilize in Q4. Only time will tell whether these rosy forecasts will come to fruition.

UK Inflation Rates: What’s New?

On Wednesday, October 16, the UK Inflation figures are anticipated to be revealed ahead of the Bank of England's (BoE) forthcoming monetary policy meeting on Thursday, November 2.

Anticipated figures indicate a YoY decline in headline CPI for September, dropping from 6.7% to 6.5%. According to analysts from Investec, “despite the push higher in fuel prices over the month, we still expect that inflation continued its downward trend in September.” 

While the past CPI report acted as a “decisive factor” for the UK Central Bank’s MPC decisions, this time around, some believe that the effect may not be as big. Still, if the data is “particularly out of line” then it can certainly affect the MPC’s decision and rate decisions for the next year.

In addition to the CPI report, on Friday, October 20, the UK Retail Sales are expected to be released with expectations pointing toward a YoY rate of 2.8% in September compared to the previous 4.3%. The slower figures are attributed to the “high cost of living” adding pressure on UK households. 

More Releases from Around the World: Japan, Canada & Australia 

Other noteworthy data points to monitor this week include Canada's CPI on Tuesday, projected to reveal a moderation in headline inflation for September, and Japan's CPI on Friday, which is also anticipated to show a decline in the YoY Core rate, dropping from 3.1% to 2.7%. Furthermore, it might be worth paying attention to Australia's Jobs Report on Thursday, for which there is currently no clear consensus.

Conclusion

All in all, the upcoming week is poised to deliver critical economic insights that could significantly impact global markets. Amid escalating uncertainties and geopolitical tensions, events unfolding from Canada, the US, Japan, China, Australia, and the UK can bear particular significance for traders, investors, and consumers seeking information into the possible trajectory of the global economy in the months ahead.