Nerves on edge; US jobs data in focus for clues on Fed tapering
- In China this morning, Markit/HSBC’s manufacturing purchasing manager’s index (PMI) moved back into expansion territory in August at 50.1. This comes hot on the heels of Sunday’s strong official PMI reading of 51. However, market volatility could persist this week as US economic data and Syrian concerns remain in focus. Eyes will be on the release of the US Employment Report at the end of the week. Expectations are that the unemployment rate will stay at 7.4%, although the steady pace of job creation could continue. Analysts are forecasting that 175,000 non-farm jobs will have been created in August. If these numbers are strong, this could spur the Federal Reserve (Fed) into tapering its asset purchases later this month. Other key reports in the US include August’s Institute for Supply Management manufacturing and non-manufacturing surveys on Tuesday and Thursday, respectively; both could show small retracements from July’s strong readings. Trade data for July is scheduled for Wednesday.
- Central banks in Europe, UK, Japan, Australia and Mexico meet this week. No adjustments are expected to their main policy rates, but investors will be listening for any change to the European Central Bank’s outlook at its press conference on Thursday. A second estimate of second quarter euro area GDP is due mid-week, updating the preliminary 0.3% reading; hopes are for further confirmation that Europe is out of recession. On Friday July German industrial production data is revealed. In the UK, August’s manufacturing and services PMI surveys (Monday and Wednesday) will provide further clues about the strength of the British economy.