(June 5 – 09:20 ET) – Last Friday’s surprising jobs data in the U.S. sent economists scurrying back to their crystal balls, looking for clues to the next moves in coming weeks.
The big question is whether this evidence of slowing is an aberration or a start of a trend. Economists at CIBC World Markets point out that five times in the last 15 years private sector payrolls have dropped mid-cycle. In April 1990 it signalled a recession. The four other times soft real GDP growth followed in the quarter, but that was it. This week’s data likely won’t do much to clarify the situation, that will be a longer term task.
This week’s big number is Friday’s U.S. Producer Price Index. CIBC isn’t expecting anything unusual in that release, nor for the rest of the month, unless there’s an upside surprise in the Consumer Price Index later in June. Canada get its own employment report on Friday, although as unemployment ticked up in April already, CIBC isn’t expecting a repeat of last week’s surprise.
“Expect U.S. Federal Reserve Board chair Alan Greenspan to stand pat on rates on June 29,” says CIBC, with the caveat that the Fed will likely be ready to raise rates again in August. This view is shared by much of the rest of the Street, too.
European central bankers will consider the rate question this week, however. Economists at RBC DS Global Markets are calling for a rate hike out of the European Central Bank. RBC DS is calling for a 25 basis point hike on June 8. However, it expects the U.K.’s Monetary Policy Committee to stand pat.
-James Langton