The Week Ahead: Highlights

Asia-Pacific Preview

China Monthly Activity Data Up Next

By Brian Jackson, Econoday Economist

Chinas monthly activity data for July will be the focus in the Asia-Pacific region. Last months data showed stronger industrial production but slower growth in retail sales and further weakness in investment spending. PMI survey data for July showed subdued conditions in both the manufacturing and services sector, suggesting that the official data next week may again fail to show a strong improvement. Next weeks data will also be accompanied by officials updated assessment of conditions and policy settings, and will be followed later in the week by The People's Bank of China monthly review of the loan prime rate.

Australian labor market data will be watched for evidence of the impact of policy rate hikes in recent months, with monthly employment data and quarterly wage data both scheduled for release. The Reserve Bank of Australia left policy rates on hold earlier in the month after three increases earlier in the year, with officials expecting that the unemployment rate is likely to increase as economic activity cools. Next weeks data could be impacted to some extent by temporary hiring for the national census this month.

Elsewhere in the region, New Zealand will publish monthly trade and quarterly producer price data. Singapore will also report trade data, while Hong Kong is set to publish inflation data. The flash PMI survey for India will provide an early indication of conditions in August.

US Preview

Markets Await FOMC Minutes for Guidance on Fed Policy Outlook

By Theresa Sheehan, Econoday Economist

With the new Fed Chair Kevin Warsh determined to stop providing forward guidance on interest rates, the minutes of FOMC meetings assume greater importance as a vehicle for assessing the monetary policy landscape.

The minutes of the July 28-29 meeting set for 14:00 ET on Wednesday will be carefully parsed for a sense of just how deep the divide is among FOMC participants after the 9-3 meeting vote. Presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis, and Lorie Logan of Dallas all preferred a 25-basis point hike in the fed funds target rate range. There are 12 voters on the FOMC, but 19 participants. How many others supported a rate hike at that time should become clearer.

Warsh often uses the phrase of family fight to convey both the robust nature of FOMC discussions and that there can be a wide range of views that ultimately form a consensus. Right now that consensus seems increasingly elusive as the threats to price stability in the form of energy prices are lasting longer. The next FOMC meeting is not until September 15-16 and there will be more inflation data before then to take into account, and which could tip the balance to a rate hike.

The housing market has been feeling the effects of higher mortgage rates which affect affordability for purchasers and discourage refinancing for current borrowers who might take out some equity to start a business, fund household needs like tuition or home renovation, or pay down debt.

The NAHB/Wells Fargo housing market index for August is at 10:00 ET on Monday. Starts of new single-family homes have declined in proportion to the rise in mortgage rates and falling demand after the burst of activity in the post-pandemic period when rates were at historic lows.

However, costs of building new homes have not declined with higher labor and materials costs. Homebuilders are feeling less optimistic partly because new homes are less competitive now that there is more supply of existing units. However, affordability is keeping activity in check for both new and existing housing.

The Week Ahead: Econoday Consensus Forecasts

Monday

Japan GDP for Second Quarter (Mon 0850 JST; Sun 2350 GMT; Sun 1950 EDT)

Consensus Forecast, Q/Q: 0.6%

Consensus Range, Q/Q: 0.4% to 0.7%

Consensus Forecast, Y/Y: 0.7%

Consensus Range, Y/Y: 0.2% to 1.3%

Japans real gross domestic product is expected to grow for a third consecutive quarter in the April-June period, driven by steady private consumption and solid corporate capital spending, while ongoing geopolitical uncertainties in the Middle East have pushed up energy and other commodity prices, weighing on exports and limiting their contribution to overall economic growth.

Still, economic activity is expected to remain generally positive, with public investment also seen continuing to grow and helping sustain domestic demand. Preliminary real GDP is forecast to rise 0.6 percent on the quarter in the April-June period, or an annualized 2.3 percent, accelerating from a 0.5 percent quarter-on-quarter increase, or an annualized 1.8 percent, in January-March. This would mark a third straight quarter of growth.

Private consumption, which accounts for more than half of domestic output, is expected to extend its growth streak to nine consecutive quarters in the second quarter, rising 0.5 percent on the quarter after a 0.3 percent increase in January-March. Real household income remained in positive territory during the period, while food price increases appear to have peaked, supporting private consumption.

Purchases of automobiles appeared to have increased, along with solid demand for durable goods, primarily due to demand for air conditioners ahead of tougher energy-efficiency standards set by the government to take effect from April 2027.

The recent outcome of the consumption trend index (CTI) for households also indicated resilient consumer spending, with the CTI for households with two or more people rising 0.5 percent on quarter in real terms in April-June, after increasing 0.7 percent in January-March and slumping 3.2 percent in October-December.

GDP is expected to be supported by capital spending, which is forecast to rebound with a 0.4 percent increase after falling 0.7 percent in the first quarter. Healthy corporate earnings and the solid trend in industrial production are expected to keep capital expenditure on an upward trend.

Still, geopolitical tensions remain unresolved, raising concerns that they could restrain trading activity and limit gains in exports. Exports, measured by their contribution to GDP growth, are seen contributing 0.3 percentage point in the April-June period, unchanged from the previous quarter.

Public investment is seen growing for a second straight quarter, rising 0.6 percent after a 1.5 percent increase in the first quarter.

China Fixed Asset Investment for July (Mon 1000 CST; Mon 0200 GMT; Sun 2200 EDT)

Consensus Forecast, Year to Date on Y/Y Basis: -6.1%

Consensus Range, Year to Date on Y/Y Basis: -6.2% to -5.0%

Amazingly, it is getting worse! The consensus sees FAI down 6.1 percent on year in July after a decrease of 5.7 percent in June.

China Industrial Production for July (Mon 1000 CST; Mon 0200 GMT; Sun 2200 EDT)

Consensus Forecast, Y/Y: 5.0%

Consensus Range, Y/Y: 4.9% to 5.4%

The consensus looks for growth to fade to a 5.0 percent increase on year in July after a 5.3 percent in June.

China Retail Sales July (Mon 1000 CST; Mon 0200 GMT; Sun 2200 EDT)

Consensus Forecast, Y/Y: 1.5%

Consensus Range, Y/Y: 0.4% to 1.5%

Sales seen rising by an anemic 1.5 percent on year in July after 1.0 percent in June.

Canada CPI for July (Mon 0830 EDT; Mon 1230 GMT)

Consensus Forecast, CPI - M/M: 0.4%

Consensus Range, CPI - M/M: 0.1% to 0.5%

Consensus Forecast, CPI - Y/Y: 2.9%

Consensus Range, CPI - Y/Y: 2.6% to 3.0%

CPI seen up 0.4 percent in July to reverse the 0.4 percent decline in June as energy prices rebounded. On year, CPI inflation expected at 2.9 percent, up from 2.8 percent in June.

US Empire State Manufacturing Index for August (Mon 0830 EDT; Mon 1230 GMT)

Consensus Forecast, Index: 10.0

Consensus Range, Index: 8.0 to 14.3

The Empire manufacturing index is expected at 10.0 in August from a more robust 15.6 in July, suggesting ongoing moderate growth.

US Housing Market Index for August (Mon 1000 EDT; Mon 1400 GMT)

Consensus Forecast, Index: 33

Consensus Range, Index: 31.5 to 34

Forecasters see the HMI down to 33 in August from 34 in July as doldrums continue amid affordability trouble.

Tuesday

UK Labour Market Report for July (Tue 0700 BST; Tue 0600 GMT; Tue 0200 EDT)

Consensus Forecast, ILO Unemployment Rate: 4.9%

Consensus Range, ILO Unemployment Rate: 4.7% to 4.9%

The jobless rate is expected unchanged at 4.9 percent in July.

Germany ZEW Survey for August (Tue 1100 CEST; Tue 0900 GMT; Tue 0500 EDT)

Consensus Forecast, Current Conditions: -69.6

Consensus Range, Current Conditions: -77.0 to -68.0

Consensus Forecast, Economic Sentiment: 30.0

Consensus Range, Economic Sentiment: 21.5 to 30.0

Current conditions expected to continue recovering to -69.6 in August from minus 77.6 in July. Economic sentiment seen at 30.0 versus 26.3 in July.

Canada Housing Starts for July (Tue 0815 EDT; Tue 1215 GMT)

Consensus Forecast, Annual Rate: 240

Consensus Range, Annual Rate: 220 to 265

The consensus looks for housing starts nearly flat at a 240,000 unit rate in July versus 238,971 in June.

US Housing Starts and Permits for July (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Starts - Annual Rate: 1.345 M

Consensus Range, Starts - Annual Rate: 1.300 M to 1.390 M

Consensus Forecast, Permits - Annual Rate: 1.370 M

Consensus Range, Permits - Annual Rate: 1.370 M to 1.400 M

Starts expected to falter to a 1.345 million unit rate in July from 1.427 million in June. The housing market remains depressed by high housing prices and high mortgage rates.

US Imports and Export Prices for July (Tue 0830 EDT; Tue 1230 GMT)

Consensus Forecast, Import Prices - M/M: 0.1%

Consensus Range, Import Prices - M/M: -0.1% to 0.4%

Consensus Forecast, Export Prices - M/M: 0.0%

Consensus Range, Export Prices - M/M: -0.2% to 0.2%

Import and export prices are expected basically flat in July from June.

US Industrial Production for July (Tue 0915 EDT; Tue 1315 GMT)

Consensus Forecast, Industrial Production - M/M: 0.3%

Consensus Range, Industrial Production - M/M: -0.1% to 0.5%

Consensus Forecast, Manufacturing Output - M/M: 0.2%

Consensus Range, Manufacturing Output - M/M: 0.1% to 0.2%

Consensus Forecast, Capacity Utilization Rate: 76.3%

Consensus Range, Capacity Utilization Rate: 76.2% to 78.1%

Output expected to show a modest 0.3 percent increase in July with capacity usage at 76.3 percent, up from 76.1 percent in June.

US Pending Home Sales Index for July (Tue 1000 EDT; Tue 1400 GMT)

Consensus Forecast, M/M: 1.4%

Consensus Range, M/M: 0.4% to 1.9%

The consensus looks for pending home sales to recover by 1.4 percent in July from June after dropping 5.4 percent in June.

Wednesday

Japan Machinery Orders for June (Wed 0850 JST; Tue 2350 GMT; Tue 1950 EDT)

Consensus Forecast, M/M: 8.6%

Consensus Range, M/M: 6.5% to 11.7%

Consensus Forecast, Y/Y: 11.0%

Consensus Range, Y/Y: 8.9% to 15.1%

After an expected setback in May, core orders are forecast to rise 8.6 percent on the month in June, following a 12.4 percent drop in May. The May order amount fell to a six-month low of 962.0 billion yen after an unexpected increase in April, when orders rose 8.7 percent to a record high of 1.099 trillion yen.

The May decline was led by lower orders for engines from shipyards, as well as cranes and conveyors from general machinery makers and mining firms. Orders for computers also pulled back at electrical equipment producers, general machinery makers and transport firms.

The three-month moving average fell 4.8 percent in May, but the Cabinet Office maintained its assessment that machinery orders are showing signs of a pickup. On a year-on-year basis, core machinery orders are also expected to rebound, rising 11.0 percent in June after falling 1.9 percent in May, the first decline in six months.

Australia Wage Price Index for Second Quarter (Wed 1130 AEST; Wed 0130 GMT; Tue 2130 EST)

Consensus Forecast, Q/Q: 0.8%

Consensus Range, Q/Q: 0.8% to 1.0%

Consensus Forecast, Y/Y: 3.2%

Consensus Range, Y/Y: 3.2% to 3.2%

Wages expected up 0.8 percent and 3.2 percent on year in Q2 after increases of 0.8 percent and 3.1 percent in Q1.

UK CPI for July (Wed 0700 BST; Wed 0600 GMT; Wed 0200 EDT)

Consensus Forecast, M/M: 0.4%

Consensus Range, M/M: 0.3% to 0.4%

Consensus Forecast, Y/Y: 3.0%

Consensus Range, Y/Y: 2.8% to 3.0%

Consensus Forecast, Core CPI - Y/Y: 2.5%

Consensus Range, Core CPI - Y/Y: 2.5% to 2.7%

CPI expected to worsen with increases of 0.4 percent on the month and 3.0 percent on year in July after rising 0.1 percent and 2.6. percent in June.

Eurozone HICP for July (Wed 1100 CEST; Wed 0900 GMT; Wed 0500 EDT)

Consensus Forecast, HICP - Y/Y: 2.9%

Consensus Range, HICP - Y/Y: 2.9% to 2.9%

Consensus Forecast, Narrow Core - Y/Y: 2.5%

Consensus Range, Narrow Core - Y/Y: 2.5% to 2.5%

The consensus sees no revision in the final for July from the flash with HICP up 2.9 percent and narrow core at 2.5 percent on year.

Thursday

Japan Merchandise Trade for July (Thu 0850 JST; Wed 2350 GMT; Wed 1950 EDT)

Consensus Forecast, Balance: -670.70 B

Consensus Range, Balance: -708 B to -250 B

Consensus Forecast, Imports - Y/Y: 26.5%

Consensus Range, Imports - Y/Y: 21.0% to 29.2%

Consensus Forecast, Exports - Y/Y: 21.2%

Consensus Range, Exports - Y/Y: 19.0% to 23.8%

Japanese exports are projected to increase sharply in July, rising for an 11th straight month on the year and extending the recent upward trend on robust global demand for semiconductors, chipmaking equipment and automobiles. Imports are expected to grow for a sixth consecutive month as the resource-poor country scrambles to diversify its sources of oil purchases away from the Middle East, pushing up import costs.

Robust imports, also boosted by the yens weakness, are seen pushing the trade balance into a deficit for a third straight month in July, at 670.70 billion yen, following a deficit of 409.93 billion yen a month earlier.

Japanese exports are expected to remain resilient despite additional U.S. tariffs and ongoing deterioration in diplomatic relations with China, as exports to both countries climbed for the four months through June, with Japanese auto exports to the U.S. pointing to a strong recovery.

Exports are seen rising 21.2% on the year in July after jumping a revised 19.3% a month earlier.

The value of exports in June climbed to the second-highest level on record at a revised 10.93 trillion yen, led by increases in automobiles, computer chips and non-ferrous metals.

Meanwhile, imports are also expected to continue showing strong growth in July, with data from the Ministry of Finance indicating that imports through around mid-July rose 22.5% from a year earlier. Taking this result into account, imports are expected to rise 26.5% in July after increasing 25.4% a month earlier.

China Loan Prime Rate for August (Thu 0915 CST; Thu 0115 GMT; Wed 2115 EDT)

Consensus Forecast, 1-Year Rate - Change: 0 bp

Consensus Range, 1-Year Rate - Change: 0 bp to 0 bp

Consensus Forecast, 1-Year Rate - Level: 3.0%

Consensus Range, 1-Year Rate - Level: 3.0% to 3.0%

Consensus Forecast, 5-Year Rate - Change: 0 bp

Consensus Range, 5-Year Rate - Change: 0 bp to 0 bp

Consensus Forecast, 5-Year Rate - Level: 3.50%

Consensus Range, 5-Year Rate - Level: 3.50% to 3.50%

No change expected from the PBOC, again.

Australia Labour Force Survey for July (Thu 1130 AEST; Thu 0130 GMT; Wed 2130 EDT)

Consensus Forecast, Employment - M/M: 16K

Consensus Range, Employment - M/M: -15K to 25K

Consensus Forecast, Unemployment Rate: 4.4%

Consensus Range, Unemployment Rate: 4.3% to 4.5%

Jobs are seen up 15,500 in July, down from the 76,300 increase in June. The consensus looks for the jobless rate flat at 4.4 percent.

Germany PPI for July (Thu 0800 CEST; Thu 0600 GMT; Thu 0200 EDT)

Consensus Forecast, M/M: 0.3%

Consensus Range, M/M: 0.2% to 0.6%

Consensus Forecast, Y/Y: 2.3%

Consensus Range, Y/Y: 2.2% to 2.4%

The consensus looks for PPI up 0.3 percent on month and 2.3 percent on year in July. In June, PPI was down 0.3 percent on the month and up 1.8 percent on year.

Sweden Riksbank Rate Decision (Thu 0930 CEST; Thu 0730 GMT; Thu 0330 EDT)

Consensus Forecast, Change: 0 bp

Consensus Range, Change: 0 bp to 0 bp

Consensus Forecast, Level: 1.75%

Consensus Range, Level: 1.75% to 1.75%

Forecasters see the Riksbank on hold as inflation concerns are offset by worries about growth.

US Jobless Claims for Week of August 20 (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Initial Claims - Level: 211K

Consensus Range, Initial Claims - Level: 198K to 215K

Forecasters see claims up again to 211K this week from 209K last week, and 200K the week before that, and above the four-week moving average of 199K.

US Philadelphia Fed Manufacturing Index for August (Thu 0830 EDT; Thu 1230 GMT)

Consensus Forecast, Index: 25.0

Consensus Range, Index: 13.8 to 29.3

Another robust reading is the call with expectations calling for 25.0 in August, down from a remarkable 41.4 in July.

US Leading Indicators for July (Thu 1000 EDT; Thu 1400 GMT)

Consensus Forecast, M/M: 0.1%

Consensus Range, M/M: -0.2% to 0.1%

A modest 0.1 percent increase is the call.

Friday

Japan CPI for July (Fri 0830 JST; Thu 2330 GMT; Thu 1930 EDT)

Consensus Forecast, CPI - Y/Y: 1.9%

Consensus Range, CPI - Y/Y: 1.8% to 2.0%

Consensus Forecast, Ex-Fresh Food - Y/Y: 1.8%

Consensus Range, Ex-Fresh Food - Y/Y: 1.7% to 1.9%

Consensus Forecast, Ex-Fresh Food & Energy - Y/Y: 1.9%

Consensus Range, Ex-Fresh Food & Energy - Y/Y: 1.8% to 2.0%

Japans nationwide core consumer price index, which excludes fresh food, is expected to accelerate further in July, along with two other key readings, as a general uptrend in prices stemming from rising import costs amid prolonged geopolitical tensions in the Middle East and the weaker yen continues to push up prices.

The Japanese government has updated the CPI base year, moving it to 2025 from 2020. The government revises the base year every five years, with the change taking effect from the July figures. For example, the update resulted in a minor 0.1 percentage point downward adjustment to the headline CPI for June 2026.

Falling food prices and the governments efforts to cap gasoline and utility prices are expected to ease some inflationary pressure, but the underlying upward trend in nationwide prices is seen strengthening in July. The forecast is in line with Tokyo CPI figures released on July 31, which already indicated an acceleration in consumer inflation in the capital.

The core CPI, which excludes fresh food, is expected to rise 1.8 percent on the year in July, accelerating from a 1.6 percent increase a month earlier. It rose just 1.4 percent in April and May, the lowest level since March 2022.

Tokyo CPI, which is a leading indicator of the nationwide trend, accelerated further in July, pushing the annual rate of core consumer inflation to a six-month high of 1.9 percent. Two other key measures, the headline CPI and core-core CPI, which excludes fresh food and energy, both climbed to 2.0 percent.

The two other key nationwide inflation measures in July are expected to follow the trend in Tokyo. The overall CPI is seen rising 1.9 percent after increasing 1.7 percent in June. Core-core CPI, which excludes both fresh food and energy, is also expected to rise 1.9 percent in July, following a 1.7 percent increase in June.

France PMI Composite Flash for August (Fri 0815 CEST; Fri 0615 GMT; Fri 0215 EDT)

Consensus Forecast, Composite Index: 49.3

Consensus Range, Composite Index: 49.0 to 49.9

Consensus Forecast, Manufacturing Index: 50.0

Consensus Range, Manufacturing Index: 50.0 to 50.1

Consensus Forecast, Services Index: 49.9

Consensus Range, Services Index: 49.7 to 50.0

The composite index is expected at 49.3 in the August flash versus 49.4 in the July final.

France Business Climate Indicator for August (Fri 0845 CEST; Fri 0645 GMT; Fri 0245 EDT)

Consensus Forecast, Index: 97.3

Consensus Range, Index: 96.0 to 98.0

Forecasters look for the index at 97.3 in August versus 97.0 in July.

Germany PMI Composite Flash for August (Fri 0930 CEST; Fri 0730 GMT; Fri 0330 EDT)

Consensus Forecast, Composite Index: 51.3

Consensus Range, Composite Index: 50.7 to 51.5

Consensus Forecast, Manufacturing Index: 52.5

Consensus Range, Manufacturing Index: 52.0 to 52.7

Consensus Forecast, Services Index: 50.1

Consensus Range, Services Index: 50.0 to 50.7

The composite index is expected at 51.3 in the August flash, unchanged from 51.3 in the July final.

Eurozone PMI Composite Flash for August (Fri 1000 CEST; Fri 0800 GMT; Fri 0400 EDT)

Consensus Forecast, Composite Index: 51.6

Consensus Range, Composite Index: 51.5 to 52.0

Consensus Forecast, Manufacturing Index: 51.9

Consensus Range, Manufacturing Index: 51.6 to 52.2

Consensus Forecast, Services Index: 51.5

Consensus Range, Services Index: 51.5 to 52.0

The composite index is expected at 51.6 in the August flash versus 52.0 in the July final.

UK PMI Composite Flash for August (Fri 0930 BST; Fri 0830 GMT; Fri 0430 EDT)

Consensus Forecast, Composite Index: 51.5

Consensus Range, Composite Index: 51.2 to 52.1

Consensus Forecast, Manufacturing Index: 51.5

Consensus Range, Manufacturing Index: 51.5 to 52.0

Consensus Forecast, Services Index: 52.0

Consensus Range, Services Index: 51.0 to 52.0

The composite index is expected at 51.5 in the August flash versus 52.2 in the July final.

Canada Retail Sales for June (Fri 0830 EDT; Fri 1230 GMT)

Consensus Forecast, M/M: 0.4%

Consensus Range, M/M: 0.4% to 0.4%

Forecasters agree with Statistics Canadas preliminary estimate calling for a 0.4 percent increase for June from May.

US PMI Flash for August (Fri 0945 EDT; Fri 1345 GMT)

Consensus Forecast, Manufacturing Index: 53.7

Consensus Range, Manufacturing Index: 53.5 to 54.4

Consensus Forecast, Services Index: 53.8

Consensus Range, Services Index: 52.4 to 53.9

The manufacturing index is seen a bit lower but still well in expansion at 53.7 in the August flash versus 53.9 in the July final. Services expected at 53.8 versus 54.6.

Eurozone EC Consumer Confidence Flash for August (Fri 1600 CEST; Fri 1400 GMT; Fri 1000 EDT)

Consensus Forecast, Index: -16.5

Consensus Range, Index: -17.0 to -16.0

A weaker reading at minus 16.5 is the call versus the prior minus 15.9.