Investors this week focused on macroeconomic indicators from the US and Canada, with the Bank of Canada meeting and employment data from both countries being pivotal events.
On Tuesday, it was revealed that the US manufacturing sector experienced a slight uptick in August, rebounding from an eight-month low in July. The Institute for Supply Management (ISM) reported that the Manufacturing PMI rose to 47.2, slightly below analysts' expectations of 47.5.
Despite this increase, the index remains under the 50-mark, signaling a contraction in the sector, which represents 10.3% of the US economy. The Markit PMI for manufacturing also declined to 47.9, missing the forecast of 48.0.
In Switzerland, GDP grew by 0.7% in the second quarter, surpassing both expectations and the previous quarter's growth of 0.5%. The Swiss economy expanded by 1.8% year-over-year, up from 0.6% in the prior quarter.
On Wednesday, the Job Openings and Labour Turnover Survey (JOLTS) revealed that the number of job openings in the United States dropped to 7.673 million, marking the lowest level since January 2021.
The Bank of Canada reduced its key interest rate by 0.25 percentage points to 4.25% on Wednesday, attributing the decision to a slowdown in inflation, which declined to 2.5% in July, the lowest rate in 40 months. The Governor of the Bank of Canada Tiff Macklem emphasized that further rate cuts might be on the horizon if inflation continues to align with forecasts.
Meanwhile, in Australia, GDP grew by 0.2% in the second quarter, matching expectations, but annual growth slowed to 1.0%, the slowest pace in decades.
On Thursday, U.S. data revealed that the services sector continued to expand, though at a slower pace. The ISM Services PMI increased to 51.5, while the Markit PMI climbed to 55.7. Despite these positive indicators, the sector remains under pressure from rising interest rates and inflation. In addition, Jobless Claims fell to 227,000, the lowest in eight weeks, suggesting that the labor market is stabilizing.
However, ADP data indicated that U.S. private sector employment growth in August was the weakest since 2021, with only 99,000 jobs added, significantly below the expected 144,000. This suggests a cooling labor market ahead of the government’s employment report on Friday.
U.S. labor market data for August, including the unemployment rate and non-farm payrolls change, is set to be released at 12:30 GMT on Friday. The unemployment rate is anticipated to decrease to 4.2% from 4.3%, while average hourly earnings are expected to rise by 0.3%.
Canada’s labor market data will also be published at 12:30 p.m. GMT. Employment is forecasted to increase by 25.6 thousand jobs, with the unemployment rate expected to rise from 6.4% to 6.5%.
Stay tuned for updates and keep informed about these key macroeconomic developments!
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