Globally the major economic and market-moving news this week are the tariff rises imposed by Donald Trump as of September 1 (Sunday) and the August jobs data on Friday, as well as surveys of manufacturing activity around the globe.
It’s also a big week for the Australian economy – see separate story.
Those manufacturing activity surveys are out today around the globe – starting with Australia where another contractionary reading is forecast.
Already the first of two start of month reports have confirmed that Chinese manufacturing continues to contract – not by significant amounts – but enough to underline the sluggishness of demand – domestically and externally which is being damaged by the Trump trade war.
The official Purchasing Managers’ Index (PMI) fell to 49.5 in August, China’s National Bureau of Statistics said on Saturday, down from 49.7 in July and below the 50-point mark that separates growth from contraction for the 4th month in a row.
Don’t be surprised if the value of the country’s external currency, the Yuan is allowed to slip further under 7 to the US dollar as the government looks to offset the impact of the tariffs with managed devaluations of the currency.
Friday’s jobs report for August is forecast to show 160,000 new jobs, an unchanged jobless rate of 3.7% and wages growth around an annual rate of 3.3%.
That will probably help the Fed keep rates on hold later this month but the very weak core inflation data for July – released on Friday and showing an annual rate of 1.4% which is far below the Fed’s 2% target rate – is again a major concern and will add to pressure to cut rates.
The trade data for July is out midweek and the monthly survey of services activity is out later in the week and expected to show a small fall. The start of month survey of US manufacturing activity will be out tonight and show the sector is still growing – but at a slower rate than before.
The trade war will dominate markets this week – Wall Street and US markets are closed tonight for the Labor Day holiday which signals the end of the summer break and the step-up in activity as investors and traders return to their desks.
September can be a disappointing month for investors (see US markets report).
In Europe, Brexit dominates again and the chances are growing for a new Italian government being formed this week from the Opposition and the 5 Star group (which was in the previous government with the hard-right Northern League).
The third estimate of Eurozone second-quarter GDP will be issued on Friday along with German industrial production data for July which is expected to be very weak and confirm the belief that the country’s economy is sliding into a recession.
In Asia South Korean GDP for the second quarter (expected to be weak) and inflation will be out tomorrow
In Australia, it’s a big week.
There’s the Reserve Bank board’s September meeting tomorrow – no rate cut is expected, but some economists say there’s a chance the central bank should surprise with one ahead of the release of what are expected to be the weakest set of national accounts in a decade or two.
Ahead of the Wednesday release of the GDP data there are figures on June quarter wages, salaries and inventories, the current account and government finance data tomorrow, plus retail sales, housing approvals and the July trade surplus figures which are expected to large (But August’s figures in a month will see a big fall in the size of the surplus).
Retail sales tomorrow could see a rise of 0.3% because of spending on tax refunds, but another set of house price figures later today will dampen enthusiasm. while the CoreLogic data for August could show a rise of 0.8%, that will be down to rises in Sydney and Melbourne which will offset weaknesses in other markets.
