Week ahead: inflation, jobs and PMIs across major economies

The week opens with traders eyeing Canada's inflation report for signals on the BoC's next move.

Tuesday brings the U.K.'s average earnings index 3m/y, claimant count change, and unemployment rate. Across the Atlantic, the key U.S. data include ADP weekly employment change, building permits, housing starts, and pending home sales m/m.

U.K. inflation figures arrive on Wednesday, and attention turns to New Zealand's price data on Thursday. U.S. jobless claims are also due that day.

Friday sees flash manufacturing and services PMIs from Australia, the U.K., the Eurozone, and the U.S. Japan publishes national core CPI y/y, and both the U.K. and Canada report retail sales. For the U.S., attention falls on the revised UoM consumer sentiment and revised UoM inflation expectations.

Canadian CPI is seen at 0.2% m/m on consensus, after -0.1% previously. Median CPI y/y is projected to stay at 2.0%, trimmed CPI y/y at 1.9%, and common CPI y/y at 2.6%.

These inflation figures are being watched for signals on the BoC's next policy call, scheduled for the following week. The Bank's business outlook survey should add further detail on the economy and price expectations.

Market participants are looking for indications that still-high energy costs could be feeding wider inflation, though so far there is little sign of that spilling into consumer prices at large.

RBC analysts see September headline inflation holding at 3.0% y/y, with core inflation potentially softening to 1.8% from 2.1%. Business sentiment is forecast to deteriorate further, and near-term inflation expectations may move up even as longer-term ones stay near the 2% goal.

On policy, the BoC is expected to leave rates steady until year-end. But if price data keep surprising to the upside, a December hike becomes more likely. Meanwhile, the labor market remains soft, as shown by recent job losses and an unemployment rate around 6.5%.

This week's U.S. data schedule is fairly quiet, and September housing starts plus October flash PMIs are unlikely to move markets much. With the October 28 FOMC meeting in a blackout period, Fed officials will not speak, yet markets assign a 30% probability to a rate hike. ING analysts, however, see the December 9 meeting as the more likely venue for such a move.

For the U.K., average earnings index 3m/y is seen at 3.8% on consensus, compared with 3.9% before, and claimant count change is put at 19.4K versus 27.8K previously. Unemployment is expected to stay at 4.9%.

After a long stretch of softness, the labor market is starting to stabilize, especially in consumer services. Still, no strong rebound is on the horizon, and this week's numbers probably will show wage pressure staying muted.

On prices, CPI y/y is expected at 3.4% versus 3.1% earlier, and core CPI y/y at 2.8%, up from 2.6%. Certain analysts see headline inflation climbing to 3.5% and heading toward 4.0% by year-end, though higher energy costs still have not caused widespread price increases.

Fears of firmer inflation are likely to push the BoE to raise rates in November and possibly again in February. ING analysts, however, argue that markets are pricing in too much in terms of both the peak and the duration of higher rates, and they expect cuts to begin by the end of 2027.

New Zealand CPI q/q on consensus is 0.8%, down from 1.5% previously. According to Westpac, annual inflation should cool to 3.7% from 4.1% following Q3, which is lower than the RBNZ's last published projection of 3.9%.

Softer fuel prices were balanced by higher council rates, construction expenses, and food costs, leaving underlying inflation expected to stay firm and some gauges hitting the top of the RBNZ's target range.

Japan's national core CPI y/y is expected to climb to 2.1% from 1.7%. The upcoming figures likely will show inflation pressures building again: headline CPI should also pick up, and "core-core" inflation may reach 2.8%.

Recent Tokyo data back that view, as price gains are being propelled by elevated energy costs, the delayed impact of a softer yen, and robust AI-related demand affecting durable goods. A firmer national print would add to expectations that the BoJ will tighten further.

Wells Fargo analysts said that with the policy rate at 1.25%, a further 25 bps increase is due in December, lifting it to 1.50%, and more hikes would follow in 2027.

According to ING, eurozone business activity may lose some speed in October after PMI data beat expectations during the summer. Higher energy costs and fresh worries about France's budget could drag on manufacturing and services alike, but the composite index is still seen holding above the 50-point threshold.