UK inflation and the FOMC minutes are the week’s main events. A jump in household energy bills is expected to lift UK CPI, although softer services inflation should temper the increase, say experts. The Fed minutes will revisit July’s decision to hold the fed funds rate steady and the hawkish dissent, but subsequent weakness in employment, inflation and retail sales has already shifted the debate.
Monday brings Japan’s first estimate of second-quarter GDP and China’s July activity figures. UK labour data follows on Tuesday, while Australia’s wage and employment reports will help shape expectations for another RBA move. Friday’s flash PMIs provide the first broad reading on August activity.
On the geopolitical front, the Middle East remains the principal external risk. Uncertainty over the Strait of Hormuz continues to affect energy prices, transport costs and business confidence.
Trade tensions will also be a factor for North American markets this week. New 50% US duties affecting around 5% of Canadian exports not protected by USMCA exemptions are scheduled to take effect on Wednesday. However, negotiations are continuing ahead of the deadline.
All times are GMT
Sunday 16 August
23:50 – Japan – GDP (Q2, flash) Consensus: 2.0% q/q annualised (Prev: 1.8%)
Growth is expected to strengthen, supported by private consumption, business investment and public spending. HSBC forecasts a “third consecutive quarterly expansion”, with improving purchasing power and solid wage gains helping household demand. Labour shortages and digital investment should support capital spending, while weaker imports may produce a modest contribution from net trade. A firm reading would strengthen the case for the BoJ to raise rates again.
Monday 17 August
02:00 – Mainland China – Activity Data (Jul) Consensus: Retail sales 1.5% y/y (Prev: 1.0%); industrial production 5.0% y/y (Prev: 5.3%); fixed-asset investment -6.2% y/y YTD (Prev: -5.7%)
Activity is expected to remain subdued. Societe Generale describes the picture as “still weak”, with softer factory surveys pointing to slower production growth. Retail sales should improve slightly, helped by services and summer travel, although the boost from trade-in subsidies is fading. Investment remains the weakest link as the property downturn persists and fiscal constraints limit infrastructure spending. High-tech manufacturing and exports should continue to provide some support.
Inflation is forecast to rise, although NBC is slightly below consensus at 2.9%. It estimates that higher gasoline prices lifted the unadjusted monthly index by 0.4%. The BoC’s preferred measures should remain better behaved, with median CPI rising to 2.0% and trimmed CPI holding at 1.8%. NBC therefore sees underlying inflation as comparatively contained. A stronger or broader increase would revive pressure on the BoC to consider another rate rise.
Speakers: ECB's Lane
Tuesday 18 August
06:00 – UK – Labour Force Survey (Jun) Consensus: Unemployment rate 4.7% (Prev: 4.9%); average weekly earnings 4.1% 3m/y (Prev: 4.3%)
Commentators note that the report should present a mixed picture, with unemployment expected to fall but wage growth slowing. Deutsche Bank urged “a word of caution” after sampling problems reduced the number of completed LFS interviews, making the unemployment reading less reliable than usual. Payrolls, vacancies and private-sector pay may provide a clearer guide. Further wage moderation would support the BoE’s decision to remain on hold, while a sharp fall in unemployment could concern the hawks.
Headline inflation is expected to rise sharply after a 13% increase in the Ofgem household energy price cap. Nomura says this will be the “dominant effect”, adding around 0.4 percentage points to the annual rate. It forecasts core CPI at 2.4%, slightly below consensus, and services inflation at 3.4%. Lower fuel and food inflation should provide some relief, leaving the composition more important than the headline for the BoE.
18:00 – US – FOMC Meeting Minutes
The minutes should provide more detail on the split behind July’s 9-3 decision to leave rates unchanged. Attention will centre on how many officials, beyond the three dissenters, were prepared to support a rise and what conditions might prompt action in September. BofA cautions that the account will already look “stale” following softer jobs and inflation data. Even so, evidence of broader support for tightening could move rate expectations.
Speakers: RBA's Hauser | ECB's Lagarde
Thursday 20 August
02:30 – Australia Labour Force Survey (Jul) Consensus: Employment 13.5k (Prev: 76.4k); unemployment rate 4.4% (Prev: 4.4%)
Employment growth is expected to slow sharply after June’s unusually strong increase. Commonwealth Bank of Australia analysts are below consensus and forecast no change in employment, arguing that the previous result probably “overstates current momentum”. Its internal data show no material reacceleration in hiring, while participation is expected to ease to 66.9%. Unemployment should remain at 4.4%. Another strong report would keep an RBA hike in play, while a soft outcome would support an extended hold.
07:30 – Sweden Riksbank Interest Rate Decision Consensus: On Hold (Prev: 1.75%)
The Riksbank is expected to leave its policy rate unchanged, although communication may turn more hawkish. Danske notes that both inflation and economic momentum have surprised to the upside since June, with higher goods prices and resilient household demand strengthening the case for further tightening. It expects the bank to “open the door to a September hike”. Markets are likely to focus on any change in the policy guidance.
The composite PMI is expected to ease after July’s stronger reading but remain consistent with modest growth. Danske calls the flash surveys the week’s “most interesting data release”, particularly after recent resilience in the eurozone. Higher energy and transport costs may have hit firms more acutely in August, while heatwaves could have disrupted manufacturing and tourism. Prices and delivery times may prove as important as the headline reading for the ECB outlook.
Speakers: --
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UK inflation and the FOMC minutes are the week’s main events. A jump in household energy bills is expected to lift UK CPI, although softer services inflation should temper the increase, say experts. The Fed minutes will revisit July’s decision to hold the fed funds rate steady and the hawkish dissent, but subsequent weakness in employment, inflation and retail sales has already shifted the debate.
Monday brings Japan’s first estimate of second-quarter GDP and China’s July activity figures. UK labour data follows on Tuesday, while Australia’s wage and employment reports will help shape expectations for another RBA move. Friday’s flash PMIs provide the first broad reading on August activity.
On the geopolitical front, the Middle East remains the principal external risk. Uncertainty over the Strait of Hormuz continues to affect energy prices, transport costs and business confidence.
Trade tensions will also be a factor for North American markets this week. New 50% US duties affecting around 5% of Canadian exports not protected by USMCA exemptions are scheduled to take effect on Wednesday. However, negotiations are continuing ahead of the deadline.
All times are GMT
23:50 – Japan – GDP (Q2, flash)
Consensus: 2.0% q/q annualised (Prev: 1.8%)
Growth is expected to strengthen, supported by private consumption, business investment and public spending. HSBC forecasts a “third consecutive quarterly expansion”, with improving purchasing power and solid wage gains helping household demand. Labour shortages and digital investment should support capital spending, while weaker imports may produce a modest contribution from net trade. A firm reading would strengthen the case for the BoJ to raise rates again.
02:00 – Mainland China – Activity Data (Jul)
Consensus: Retail sales 1.5% y/y (Prev: 1.0%); industrial production 5.0% y/y (Prev: 5.3%); fixed-asset investment -6.2% y/y YTD (Prev: -5.7%)
Activity is expected to remain subdued. Societe Generale describes the picture as “still weak”, with softer factory surveys pointing to slower production growth. Retail sales should improve slightly, helped by services and summer travel, although the boost from trade-in subsidies is fading. Investment remains the weakest link as the property downturn persists and fiscal constraints limit infrastructure spending. High-tech manufacturing and exports should continue to provide some support.
12:30 – Canada – CPI (Jul)
Consensus: 3.0% y/y (Prev: 2.8%)
Inflation is forecast to rise, although NBC is slightly below consensus at 2.9%. It estimates that higher gasoline prices lifted the unadjusted monthly index by 0.4%. The BoC’s preferred measures should remain better behaved, with median CPI rising to 2.0% and trimmed CPI holding at 1.8%. NBC therefore sees underlying inflation as comparatively contained. A stronger or broader increase would revive pressure on the BoC to consider another rate rise.
Speakers: ECB's Lane
06:00 – UK – Labour Force Survey (Jun)
Consensus: Unemployment rate 4.7% (Prev: 4.9%); average weekly earnings 4.1% 3m/y (Prev: 4.3%)
Commentators note that the report should present a mixed picture, with unemployment expected to fall but wage growth slowing. Deutsche Bank urged “a word of caution” after sampling problems reduced the number of completed LFS interviews, making the unemployment reading less reliable than usual. Payrolls, vacancies and private-sector pay may provide a clearer guide. Further wage moderation would support the BoE’s decision to remain on hold, while a sharp fall in unemployment could concern the hawks.
Speakers: ECB's Lane
06:00 – UK – CPI (Jul)
Consensus: 2.9% y/y (Prev: 2.6%); core CPI 2.5% y/y (Prev: 2.6%)
Headline inflation is expected to rise sharply after a 13% increase in the Ofgem household energy price cap. Nomura says this will be the “dominant effect”, adding around 0.4 percentage points to the annual rate. It forecasts core CPI at 2.4%, slightly below consensus, and services inflation at 3.4%. Lower fuel and food inflation should provide some relief, leaving the composition more important than the headline for the BoE.
18:00 – US – FOMC Meeting Minutes
The minutes should provide more detail on the split behind July’s 9-3 decision to leave rates unchanged. Attention will centre on how many officials, beyond the three dissenters, were prepared to support a rise and what conditions might prompt action in September. BofA cautions that the account will already look “stale” following softer jobs and inflation data. Even so, evidence of broader support for tightening could move rate expectations.
Speakers: RBA's Hauser | ECB's Lagarde
02:30 – Australia Labour Force Survey (Jul)
Consensus: Employment 13.5k (Prev: 76.4k); unemployment rate 4.4% (Prev: 4.4%)
Employment growth is expected to slow sharply after June’s unusually strong increase. Commonwealth Bank of Australia analysts are below consensus and forecast no change in employment, arguing that the previous result probably “overstates current momentum”. Its internal data show no material reacceleration in hiring, while participation is expected to ease to 66.9%. Unemployment should remain at 4.4%. Another strong report would keep an RBA hike in play, while a soft outcome would support an extended hold.
07:30 – Sweden Riksbank Interest Rate Decision
Consensus: On Hold (Prev: 1.75%)
The Riksbank is expected to leave its policy rate unchanged, although communication may turn more hawkish. Danske notes that both inflation and economic momentum have surprised to the upside since June, with higher goods prices and resilient household demand strengthening the case for further tightening. It expects the bank to “open the door to a September hike”. Markets are likely to focus on any change in the policy guidance.
Speakers: --
08:00 – Eurozone – HCOB Composite PMI (Aug, flash)
Consensus: 51.6 (Prev: 52.0)
The composite PMI is expected to ease after July’s stronger reading but remain consistent with modest growth. Danske calls the flash surveys the week’s “most interesting data release”, particularly after recent resilience in the eurozone. Higher energy and transport costs may have hit firms more acutely in August, while heatwaves could have disrupted manufacturing and tourism. Prices and delivery times may prove as important as the headline reading for the ECB outlook.
Speakers: --