It will be a busy week with plenty of economic events to watch. Monday brings inflation data from Canada, while the U.S. releases the Empire State manufacturing index.
On Tuesday, the U.K. will publish the claimant count change, the average earnings index 3m/y and the unemployment rate. Flash manufacturing and services PMIs will be released for the euro area, the U.K. and the U.S. In addition, labor market data will be in focus in the U.S.
Wednesday features U.K. inflation data and New Zealand’s GDP q/q release while Thursday shifts attention to central banks, with monetary policy announcements from the Bank of England and the European Central Bank. In the U.S., unemployment claims and inflation data will also be released.
Finally, on Friday, the Bank of Japan will hold its monetary policy meeting, while the U.K. will release retail sales m/m data. Throughout the week, several FOMC members are expected to deliver remarks.
In Canada, the consensus for CPI m/m is 0.1% versus 0.2% previously. The median CPI y/y is expected to remain unchanged at 2.9%, while the trimmed CPI y/y is seen easing from 3.0% to 2.9%. The common CPI y/y is forecast to rise slightly from 2.7% to 2.8%.
Headline inflation is expected to come in around 2.2% y/y. Analysts at RBC note that, although gasoline prices rose modestly during the month, energy inflation remains deeply negative on a year-on-year basis, largely due to the removal of consumer carbon surcharges earlier this year.
Food prices, however, are likely to continue rising at a faster pace, remaining above 3% annually, consistent with higher agricultural input costs earlier in the year. Even though inflation is staying above the BoC's target, economic conditions are improving and analysts expect the Bank will pause its easing cycle for the foreseeable future.
In the U.K., the consensus for the claimant count change is +22.3K versus +29.0K previously. The average earnings index 3m/y is expected to ease to 4.4% from 4.8%, while the unemployment rate is forecast to rise from 5.0% to 5.1%.
Labour market conditions have been steadily losing momentum over the course of the year, and this ongoing trend is expected to further dampen wage growth, according to ING analysts.
The initial slowdown was concentrated in the private sector, but more recently signs of softening have also emerged in the public sector. Looking ahead, the outlook appears challenging, as government departments are set to face tighter budgets.
In the U.S., the consensus expects average hourly earnings to rise 0.3% m/m vs. 0.2% previously, nonfarm payrolls to increase by 50K vs. 119K and the unemployment rate to edge up from 4.4% to 4.5%.
This week’s labour market release will include data for both October and November. However, the October figures will be incomplete after data collection was disrupted by the government shutdown.
Payrolls are expected to have contracted in October, largely reflecting a temporary decline in federal employment linked to resignations, according to Wells Fargo analysts.
As November data may also be affected by residual distortions, analysts expect markets to focus primarily on the unemployment rate, which is forecast to rise to 4.5%, reinforcing the broader narrative of a gradually cooling U.S. labour market.
In the U.K., the consensus expects headline CPI inflation to ease from 3.6% to 3.5% y/y, while core CPI is forecast to remain unchanged at 3.4%.
From a monetary policy perspective the Bank of England will be looking for confirmation that food price pressures have peaked and that services inflation shows signs of cooling. Policymakers will also be assessing whether this trend is likely to persist into the new year, with clearer progress potentially emerging in April.
At this week’s meeting, the Bank is expected to deliver a 25 bps rate cut to 3.75%. However, the decision appears more finely balanced than current market pricing suggests, with policymakers still divided and a sizable share of the committee likely to oppose easing.
While inflation has shown some improvement and recent communication points to a measured easing cycle, the backdrop of weaker growth conditions, easing wage growth, and softening economic momentum will remain central to the debate.
At this week’s meeting, the ECB is expected to keep rates unchanged at 2.00%. Recent data support a steady policy stance, with economic conditions holding up and business surveys remaining in expansionary territory.
Inflationary pressures persist, particularly in services, reinforcing the Bank’s view that current policy settings remain appropriate. The market will focus on the updated forecasts for any shift in the outlook, but overall rates are likely to stay on hold for some time.
U.S. inflation data for October are expected to be incomplete, with neither headline nor core CPI published. As a result, attention will shift to the combined inflation trends for 2 months.
Inflation over this period is expected to remain near 3% y/y, with core pressures easing as goods prices soften and services inflation continues to cool, particularly in housing and travel.
Looking ahead, underlying inflation is expected to remain broadly stable. Temporary tariffs-driven price pressures for goods early next year should be offset by weaker labor market conditions and productivity gains, allowing inflation to gradually trend lower over time, Wells Fargo analysts said.
At this week’s meeting, the BoJ is widely expected to deliver a 25 bps rate hike, taking the policy rate to 0.75%. The market appears to have largely priced in this move, making it the most likely outcome as it has been signaled by multiple sources.
If delivered, this would mark the first rate hike since January 2025 and would lift rates to their highest level in three decades. Traders will be closely watching for any guidance on the future pace of policy adjustment, with many economists anticipating further hikes that could take the policy rate to at least 1.00% by September next year.
