2026-02-02 08:51:00
Monday kicks off with manufacturing PMI releases for the Eurozone, the U.K., and the U.S., while Tuesday, attention will turn to Australia with the RBA’s monetary policy announcement.
In the U.S., Tuesday will bring the JOLTS job openings report and New Zealand will publish its employment change q/q, the unemployment rate, and the labour cost index q/q figures.
Wednesday brings inflation data from the Eurozone while the U.S. will see the release of the ADP non-farm employment change and the ISM services PMI.
On Thursday, the spotlight will be on monetary policy announcements from both the BoE in the U.K. and the ECB in the euro area. The U.S. will also publish the weekly unemployment claims.
Friday wraps up the week with labour market data from Canada, including employment change and the unemployment rate. In the U.S., average hourly earnings, non-farm employment change, the unemployment rate, preliminary University of Michigan consumer sentiment, and inflation expectations will be released.
In the U.S., the consensus for the ISM manufacturing PMI is 48.5, up from 47.9 previously. This week’s data is expected to show some improvement in the manufacturing sector, as recent strength in durable goods points to a rebound in business investment.
That said, the broader outlook remains subdued, with overall factory activity still lacking clear direction and facing persistent headwinds.
At this week’s meeting, the RBA is expected to deliver a 25 bps rate hike, lifting the cash rate to 3.85%. The main driver behind the move is inflation, which remains above target and has proven more persistent than initially anticipated. Analysts believe that, following this meeting, the Bank is likely to adopt a wait-and-see approach, rather than signaling a series of consecutive hikes.
The accompanying Statement on Monetary Policy will update the Bank’s economic outlook, incorporating firmer inflation outcomes alongside signs of resilient consumer demand and a stable labour market, Westpac analysts said. Forecast assumptions for interest rates and the exchange rate are also likely to shift, reflecting a market outlook that now implies fewer rate cuts than were expected late last year. In New Zealand, the consensus for employment growth is 0.3% q/q versus 0.0% previously. The unemployment rate is expected to remain unchanged at 5.3%, while the labour cost index is forecast at 0.5% vs. 0.5% prior.
Analysts argue that employment gains are broadly keeping pace with population growth. This level is likely to represent the peak for the current cycle, with any further improvement expected to be gradual. With spare capacity still evident in the labour market, wage growth pressures should remain subdued in the near term, Westpac analysts said.
In the U.S., the consensus for the ISM services PMI is 53.6, down from 54.4 previously. The services sector remains under pressure, and a meaningful improvement is not expected in the near term.
Overall, the sector appears to be holding steady rather than gaining momentum, as hiring remains subdued while consumer demand continues to hold up.
In the U.K., at this week’s meeting the BoE is expected to keep the policy rate unchanged at 3.75% and potentially signal a rate cut for the March meeting. As a reminder, the Bank adopted a more dovish stance in December, delivering a 25 bps rate cut.
Since then, economic activity has been firmer than anticipated, with improvements in GDP and retail sales, while PMI trends have also come in stronger than expected. On the inflation front, pressures have continued to moderate, although core inflation remains elevated. That said, softer wage growth points to more subdued inflation dynamics in the near term.
At this week’s meeting, the ECB is expected to leave its deposit rate unchanged at 2.00%. Recent Eurozone data have been supportive, with fourth-quarter GDP growth printing at 0.3% q/q, pointing to ongoing economic resilience. Annual growth came in at 1.3%, while the unemployment rate edged down to a new record low of 6.2%.
However, the provisional GDP release lacks detail on the underlying drivers of growth, which limits its immediate policy relevance. In the absence of clearer evidence on demand conditions and inflation dynamics, Wells Fargo analysts expect the ECB to keep the deposit rate unchanged through the end of the year.
In Canada, the consensus for the employment change is +7.2K versus +8.2K previously, with the unemployment rate expected to remain unchanged at 6.8%. Employment is forecast to rise only modestly, following an unusually strong run of job gains in December.
While month-to-month outcomes remain volatile, slower population growth is materially reducing the pace of job creation needed to stabilize the labour market. In addition, a pullback in labour force participation is likely to limit available labour supply in January.
These demographic trends are expected to persist through the year, implying that even modest job losses could still be consistent with a steady or even declining unemployment rate, RBC analysts said.
Forward-looking indicators remain mixed: business surveys point to subdued hiring intentions and easing wage pressures, while online job postings suggest a more constructive demand backdrop. Although trade-sensitive sectors such as manufacturing continue to lag, a stabilizing external environment and resilient domestic demand should support a gradual recovery in hiring, with the unemployment rate projected to drift lower toward 6.3% by year-end.
In the U.S., the consensus for average hourly earnings is a 0.3% m/m increase vs. 0.3% prior. Nonfarm payrolls are expected to rise by 67K, up from 50K previously, while the unemployment rate is likely to remain unchanged at 4.4%. Analysts at Wells Fargo expect a slightly stronger 80K increase in employment, though they note that the rebound is partly driven by fewer layoffs in seasonally sensitive sectors following lighter holiday hiring last year.
The unemployment rate is still expected to hold at 4.4%, but downside risks remain, as labor-demand indicators, including the Conference Board’s labor differential and the ratio of job openings to unemployed workers, are hovering near cycle lows.
Wage growth is expected to continue moderating, a rise of average hourly earnings by only 0.3% pushing down the year-over-year pace to around 3.6%. Looking ahead, the 2025 benchmark revisions are likely to show that last year’s hiring was overstated, with average monthly payroll growth revised down from about 49K to roughly 20K–30K.
