Powell and Lagarde Count Cost of Trump’s Turbulence

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The Bureau of Labor Statistics report is due Thursday, a day earlier than usual because of the Independence Day holiday. It’s also forecast to show the unemployment rate crept up to 4.3%. For a Federal Reserve awaiting more clarity on the potential inflationary impact from tariffs, any pronounced deterioration in the labor market would likely lead to more pressure on officials to lower interest rates.

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So far, there have been only scattered signs of cracks in the job market, including the highest number of recurring claims for jobless benefits since late 2021. A Labor Department report on Tuesday is expected to show little change in May job openings from a month earlier.

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Canadian goods trade data for May will probably show a continued sharp decline in US exports, with shipments to other countries rising but not offsetting the loss of access to the American market. The first payments of Canada’s digital services tax are due Monday, hitting major US tech firms with a 3% levy on their revenue from Canadian users above C$20 million.

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Trump cited the tax as the reason for the US ending trade talks with Canada on Friday.

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Asia

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The week in Asia features a slew of PMI reports that will shed light on how regional economies are coping with elevated US tariffs. 

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China gets a pair of PMI releases, with the official gauge Monday expected to show that manufacturing activity remained contractionary for a third straight month in June as persistent deflation on top of trade tensions weighed on activity. 

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The next day sees the release of PMI figures for South Korea, Malaysia, the Philippines, Indonesia, Thailand, Vietnam, Taiwan and China’s Caixin gauge. 

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The BOJ’s Tankan survey, also on Tuesday, is forecast to show that large companies plan to boost capital investment by 10% this fiscal year. 

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Business sentiment among large manufacturers is expected to stay relatively upbeat, albeit at a lower level, while the gauge for non-manufacturers is seen staying close to the 34-year high set in the previous period. 

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May trade reports are due during the week from Australia, Indonesia, Thailand and Sri Lanka, while South Korea reports those figures for June. 

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South Korea also publishes consumer price statistics for June that may keep the Bank of Korea on track for another rate cut. Indonesia June CPI is also due.

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Industrial output figures from South Korea, India and Japan, and Japanese household spending data will bookend the week.

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Europe, Middle East, Africa

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Inflation numbers will draw attention in the euro zone. Data on Monday may show consumer-price growth picked up in Germany and Italy, though not enough to worry the ECB. For the region as a whole, economists anticipate an outcome of 2% the following day, exactly at the goal targeted by policymakers.

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Other than price reports, clues on how the region’s manufacturing sector is faring amid Trump’s tariff squeeze will also emerge. German factory orders, along with French and Spanish industrial production, will be published on Friday.

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Aside from its Sintra seminars, the ECB itself will offer plenty of other news. The results of its strategy review are due on Monday, followed by the institution’s own measure of inflation expectations the next day. On Thursday, an account of its June policy meeting will be released, revealing more on the decision to cut rates.