Larger Fed Cut Looms? Key Data Next Week In Sight

Monday, 30 September 2024, 08:00 – UK GDP (QoQ) (Q2)

The latest UK GDP data released in August 2024 showed a growth of 0.6% quarter-on-quarter (QoQ) for Q2 2024 in its preliminary reading. The reading was in line market expectation but slightly lower the previous reading of 0.7%. The British economy has recorded slight but steady growth almost every month so far this year, as the U.K. exits a shallow recession. However, due to weaker wage growth, supply challenges and the recent nation debt hit 100% of the GDP, it is likely that the upcoming release may be impacted these factors and reflecting a slowdown.

Tuesday, 1 October 2024, 16:00 – US ISM Manufacturing PMI (Sep)

The latest U.S. ISM Manufacturing PMI, released on September 3, 2024, was 47.2, slightly up from 46.8 in the previous month but still indicating contraction in the manufacturing sector as it remains below the 50.0 threshold. This marks the seventh month in 2024 that the PMI has been in contraction territory. The reading reflects ongoing challenges in the sector, including weak demand and cautious inventory management by businesses, which have been trying to balance production with reduced orders and economic uncertainties. With global economic headwinds, it is expected that the upcoming PMI will continue to remain in contraction, keeping the PMI near or below its current levels.

Wednesday, 2 October 2024, 14:15 – US ADP Non Farm Employment Change (Sep)

In August, the US ADP Non Farm Employment Change showed that private sector employment in the U.S. grew by only 99,000 jobs in August, significantly below the forecasted 144,000. This indicates a continuing slowdown in the U.S. labor market, as prior months also fell short of expectations, with July’s report at 111,000. One key reason behind this slowdown is likely the broader economic cooling in response to higher interest rates and tighter monetary policy. As the Federal Reserve continues its battle against inflation, hiring has become more cautious. The upcoming release may likely to reflect further weakness.

Friday, 4 October 2024, 14:30 – US Nonfarm Payrolls (Sep)

The most recent U.S. Nonfarm Payrolls report, released on September 6, 2024, showed that 142,000 jobs were added in August, slightly below expectations of 164,000. This figure, while stronger than the revised July number of 86,000, continues to signal a slowing labor market. The main reasons for this slowdown include the cumulative impact of the Federal Reserve’s interest rate hikes aimed at controlling inflation. Higher borrowing costs have likely reduced business expansion and hiring, particularly in interest-sensitive sectors like manufacturing and construction. It is expected that the upcoming release will continue to reflect moderation. As ADP data is an important leading indicator of labor market conditions, the release of ADP data prior could be used as a directional guide.