It will be a busy week ahead with numerous economic events. Monday kicks off with manufacturing PMI releases for the eurozone, Switzerland, the U.K., and Canada. However, special attention will be on the U.S. ISM manufacturing PMI and ISM manufacturing prices.
On Tuesday, Australia’s monetary policy meeting minutes will be released alongside retail sales data for the month. Wednesday’s focus will be on Australia’s quarterly GDP data, while Switzerland will release its latest inflation figures. Additionally, final services PMI data will be published for the eurozone, the U.K., and the U.S. The U.S. will also see the release of the ADP non-farm employment change.
Thursday’s highlight will be the ECB monetary policy announcement and the U.S. will release its unemployment claims data.
On Friday, all eyes in the U.S. will be on key labor market data, including average hourly earnings, non-farm employment change and the unemployment rate. Canada will also release its employment change and unemployment rate figures.
Throughout the week, several FOMC members are expected to deliver remarks. The week will conclude with Fed Chair Jerome Powell speaking at the U.S. Monetary Policy Forum in Chicago on Friday.
In the U.S., the consensus for the ISM manufacturing PMI is 50.6, slightly down from the previous reading of 50.9, while the ISM manufacturing prices index is expected to rise to 56.2 from the prior 54.9.
Last month, the manufacturing PMI index climbed above 50 for the first time since 2022, signaling expansion. However, the outlook remains uncertain due to headwinds from weak global demand and the impact of higher interest rates. Additionally, tariffs are exerting pressure, increasing input costs and potentially squeezing profit margins, even as some domestic production benefits.
The prices paid component remains in expansionary territory, highlighting persistent inflationary pressures. Analysts from Wells Fargo argue that this could complicate the Federal Reserve’s policy outlook.
The consensus for the ISM services PMI is 53.0, slightly up from the previous 52.8.
The outlook for the services sector is somewhat more optimistic, as it has remained in expansionary territory since mid-2024. This indicates the sector’s resilience despite ongoing economic uncertainty.
According to analysts at Wells Fargo, consumer demand for services remains strong, driven by a robust labor market and rising wages. However, inflationary pressures persist with businesses continuing to face elevated costs.
In Switzerland, the consensus for the CPI month-over-month is 0.5%, compared to the previous -0.1%. The country’s economy expanded by 0.2% q/q in Q4 2024, in line with expectations, while annual growth came in slightly weaker at 1.5%.
With inflation pressures easing—headline CPI remaining below the SNB’s 0%-2% target midpoint for five months and core CPI for four months—the SNB is anticipated to deliver a 25 bps rate cut at its next meeting in March.
At this week’s meeting, the ECB is expected to deliver a 25 bps rate cut, with further easing likely until the end of the year.
Headline inflation for January came in above expectations, but core inflation edged lower, and wage growth indicators suggest that underlying price pressures are continuing to ease. Market participants will closely monitor whether the ECB signals any shift in its policy stance or updates its inflation projections.
The economic situation in the eurozone remains uncertain, with Q4 contractions in both Germany and France, providing the ECB with additional reasons to continue reducing interest rates.
In Canada, the consensus for employment change is 17.8K vs. the previous 76.0K, while the unemployment rate is expected to rise slightly to 6.7% from 6.6%.
This week’s labor market data will be closely watched, especially with the BoC meeting scheduled for next week. Although there has been some improvement in employment figures, the unemployment rate remains higher than it was last year.
RBC analysts argue that growing uncertainty over potential U.S. tariffs has weighed on both business and consumer confidence, potentially slowing hiring. Job postings declined in February following gains in previous months, and some surveys have shown weaker job growth, with a 5,000-job decline in December if the rebound in the transportation sector is excluded.
While the Canadian job market has stabilized, hiring momentum remains fragile, reinforcing expectations that the BoC will remain cautious about rate cuts.
In the U.S., the consensus for average hourly earnings m/m is 0.3% vs the previous 0.5%. The non-farm employment change is expected at 156K vs 143K prior, while the unemployment rate is anticipated to remain steady at 4.0%.
Analysts at Wells Fargo forecast a slightly higher non-farm employment change of 170K, though forward-looking indicators suggest underlying labor demand is slowing. Small business hiring plans have declined, regional Federal Reserve Bank surveys indicate flat service-sector employment, and job postings remain at multi-year lows. Additionally, consumer confidence in the labor market has weakened.
Wells Fargo expects the unemployment rate to tick up to 4.1%, with federal government payrolls projected to decline by 5K-10K due to ongoing workforce reductions. In the longer term, slower labor force growth—driven by reduced immigration and an aging population—is expected to offset weaker hiring, keeping unemployment near 4% and limiting further declines in wage growth this year.