This article first appeared in The Edge Malaysia Weekly on September 30, 2024 - October 6, 2024
Following the US Federal Reserve’s 50-basis-point (bp) policy rate cut on Sept 18, attention will now turn to the docket of economic data from Uncle Sam this week, which will shed light on the resilience of the world’s largest economy.
The most important — the labour market report on non-farm payrolls (NFP) for September by the Bureau of Labor Statistics (BLS) — will be released on Oct 4.
Should the number of new jobs created in the US come in lower than expected, it will signal a weaker than forecast US economy.
The 50bps cut signalled growing nervousness about the declining labour market.
According to Bloomberg, it is estimated that 140,000 jobs were created in the US in September, slightly lower than the 142,000 in August, with the unemployment rate expected to remain at 4.2% in September.
On Oct 1, the Institute of Supply Management (ISM) will come out with the report on its surveys on US manufacturing activities in September. Bloomberg estimates the manufacturing activity index to come in at 47.6. This would mean a contraction for the sixth consecutive month. Nevertheless, a reading above 42.5 over a period of time generally indicates an expansion in the overall economy.
The ISM Manufacturing Purchasing Managers’ Index (PMI) came in at 47.2 in August, which was higher than the reading in July.
Politics will take centre stage in the US this week, with the first (and likely the only) debate of the vice-presidential candidates, Republican senator from Ohio J D Vance and Democrat Minnesota Governor Tim Walz, to take place on Oct 2.
US dock workers at the East Coast and Gulf ports are poised to strike on Sept 30 if a contract is not agreed on by then. This could potentially create major economic disruptions for the US.
Meanwhile, China will begin the week-long National Day Golden Week holiday from Oct 1 to 7. The key event for China’s National Day will be President Xi Jinping’s policy speech on Oct 1 for the 75th anniversary of the founding of the People’s Republic of China.
“His speech will take on more significance in the context of the recent announcements of stimulus aimed at reviving growth and stabilising the troubled property sector,” says UOB Global Economics and Markets Research in a report published on Sept 27.
Reuters reported on Sept 26 that China
is planning to issue special sovereign bonds worth about RMB2 trillion (RM1.18 trillion), which will be used to stimulate consumption as well as help local governments tackle debts. The details on this plan could be announced soon, or on Sept 30, ahead of the National Day week-long holiday, stated UOB in the report.
China will also release its September official manufacturing and non-manufacturing PMI on Sept 30. Bloomberg estimates the country’s manufacturing PMI to come in at 49.5, compared with 49.1 in August, while its non-manufacturing PMI could come in at 50.4, compared with 50.3 in August.
Japan, the second-largest Asian economy, will release its August industrial production and retail sales data on Sept 30, followed by the unemployment rate on Oct 1. The consumer confidence index for September will be out on Oct 2.
Japan’s politics will also come into focus this week, with the winner of the ruling Liberal Democrat Party’s presidential election almost certain to be approved as the next prime minister by parliament in a vote expected on Oct 1.
Meanwhile, South Korea is expected to release its September external trade data on Oct 1. Bloomberg estimates that the country’s exports will grow at a more moderate pace of 6.6% in September, compared with 11.2% in August.
Asia’s fourth-largest economy will release its industrial production data for August on Sept 30. Bloomberg estimates that South Korea will record 2% year-on-year growth and 3.3% month-on-month growth in August.
Other major key economic data from Asia are the September manufacturing PMIs for India, Indonesia, the Philippines, Malaysia, Thailand, Taiwan and Vietnam to be released on Oct 1, while South Korea’s will be out on Oct 2.
The eurozone will release the preliminary September consumer price index (CPI) inflation number on Oct 1, with the headline CPI expected to come in at between 1.8% and 2.2%, from 2.2% in August. The economic group will also release its unemployment rate for August on Oct 2, followed by the producer price index on Oct 3.
At the courts, submissions will continue this week in the 1MDB-Tanore trial of former prime minister Datuk Seri Najib Razak.
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