Canada’s employment grew 46.7k in September, above expectation of 34.5k. Full-time employment rose 112k or 0.7% mom, largest gain since March 2022. Part-time work fell -65k or -1.7%.
Unemployment rate fell from 6.6% to 6.5% better than expectation of 6.6%. Participation rate fell -0.2% to 64.9%. Total hours worked, however, fell -0.4% mom. Average hourly wages rose 4.6% yoy, slowed from 5.0% yoy.
UK GDP grew 0.2% mom in August, matched expectations. Services output grew by 0.1% mom. Production output grew by 0.5% mom. Construction output grew by 0.4% mom.
In the three months to August compared with the three months to May, GDP grew 0.2%. Service output rose 0.1%. Production output showed no growth. Construction output rose 1.0%.
New Zealand’s BusinessNZ Performance of Manufacturing Index rose slightly from 46.1 to 46.9 in September, marking the third consecutive month of improvement. Despite this, the sector remains in contraction for the 19th straight month, with the index still well below the long-term average of 52.6.
Catherine Beard, Director of Advocacy at BusinessNZ, highlighted that while it’s positive to see the highest PMI result since April, the sector faces a “long and slow road” to recovery.
The components painted a mixed picture: production improved from 46.6 to 48.0, while employment dipped slightly from 46.8 to 46.6. New orders also inched higher from 47.3 to 47.8, but deliveries fell further from 45.8 to 45.6.
Negative sentiment among respondents is gradually improving, with 63.5% expressing pessimism in September, down from 64.2% in August and significantly lower than the 76.3% seen in June. The main concerns continue to revolve around weak demand, with many businesses citing a lack of orders and sales as key issues.
Atlanta Fed President Raphael Bostic, in an interview with WSJ, indicated that he is open to pausing further rate cuts if economic data warrants it.
“I am totally comfortable with skipping a meeting if the data suggests that’s appropriate,” Bostic said.
His view aligns with the more conservative approach seen in Fed’s recent projections, where he has penciled in only one more quarter-point rate cut for the remainder of the year.
Bostic’s stance highlights a split among Fed officials regarding the future path of rate cuts. In the latest “dot plot” nine Fed members favor just one more 25bps cut this year, ten officials projected two such cuts.
SNB Vice Chair Antoine Martin indicated that the central bank may consider lowering interest rates, potentially even taking them into negative territory, as a tool to support the economy.
Speaking at an event overnight, Martin said “with inflation being reasonably low in Switzerland and with an economy that could grow faster, that tends in the direction of a lower policy rate,”
He further remarked that negative rates, although not imminent, remain a useful tool in the central bank’s arsenal, stating, “There are imaginable scenarios where this is a tool that we would use because it’s a particularly useful tool.”
“But we’re not today in a situation that this is something that we’re considering,” Martin added.
New York Fed President John Williams signaled today that monetary policy will continue to shift towards a more neutral stance in the coming months, aligning with ongoing progress toward price stability. He emphasized that while inflation remains above the 2% target, there has been clear movement in the right direction.
Williams noted, “Based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time.” He reiterated that this approach will help preserve both the economy’s strength and the health of the labor market.
While acknowledging the work still needed to achieve price stability, he expressed optimism, stating, “The data paint a picture of an economy that has returned to balance.” Despite inflation remaining elevated, the message from Williams was one of cautious confidence, suggesting the Fed’s shift towards less restrictive policy will proceed gradually.
Chicago Fed President Austan Goolsbee, in an interview with CNBC today, highlighted the clear progress made in curbing inflation and cooling the labor market over the past 12 to 18 months.
“The overall trend… is clearly that inflation has come down a lot and the job market has cooled to a level which is around where we think full employment is,” Goolsbee stated.
Looking ahead, he noted there is broad consensus among policymakers that interest rates will need to drop a “fair amount” over the period.
However, in the near-term, Goolsbee expects more “close call” meetings for FOMC as members navigate through sometimes conflicting economic data.
US CPI rose 0.2% mom in September, above expectation of 0.1% mom. CPI core (less food and energy) rose 0.3% mom, above expectation of 0.2% mom, and Shelter costs rose 0.2% mom. Food prices rose 0.4% mom. Together, these two indexes contributed over 75 percent of the monthly all items increase. Energy index fell -1.9% mom.
Over the 12-month period, CPI ticked down from 2.5% yoy to 2.4% yoy, above expectation of 2.3% yoy. That’s still the lowest level since February 2021. CPI core ticked up from 3.2% yoy to 3.3% yoy, above expectation of 3.2% yoy. Energy index fell -6.8% yoy while food index rose 2.3% yoy.
US initial jobless claims jumped sharply by 33k to 258k in the week ending October 5, well above expectation of 231k. That’s also the highest level since mid-2023. Four-week moving average of initial claims rose 7k to 231k.
Continuing claims rose 42k to 1861k in the week ending September 28. Four-week moving average of continuing claims rose 4.5k to 1832k.
Following the ECB’s 25bps rate cut in September, the minutes reveal a cautious stance on future monetary easing, emphasizing the need to rely on a broader evaluation of data, rather than any single metric. While members agreed that further reductions in policy restrictiveness would depend on incoming data, they stressed that “data-dependence” should not be misinterpreted as “data point-dependence” , and mechanical response to short-term inflation figures.
The committee highlighted that a “gradual and cautious approach” remains appropriate, as uncertainties around inflation persist. Despite some signs of improvement, it is still too early to declare the inflation battle won. Concerns over upward revisions in core inflation projections and recent surprises in services inflation were also noted.
ECB emphasized that the “real test” of inflation stability would come in 2025, when the impact of wage growth and productivity gains would be clearer.
For now, markets expect another rate cut at the upcoming October meeting, with a follow-up move in December also largely anticipated.
Japan’s PPI rose by 2.8% yoy in September, a notable increase from the previous month’s 2.6% yoy and well above the market’s expectation of 2.3% yoy.
A significant development was the shift in import prices. Yen-based import price index dropped sharply by -2.6% yoy, turning negative for the first time in eight months. This is a stark reversal from the 10.7% yoy rise recorded as recently as July. Export prices also followed a similar downward trend, falling by -1.0% yoy after previously rising by 2.5% yoy.
On a month-over-month basis, PPI remained flat at 0.0% mom, while yen-based import price index decreased by -2.9% mom, and the export price index fell by -1.7% mom. The decline in both import and export prices reflects a combination of softer global demand and a stronger Yen.
San Francisco Fed President Mary Daly expressed a cautious stance on monetary policy in a discussion last night, indicating that “two more cuts this year, or one more cut this year, really spans the range” of likely outcomes.
With inflation cooling, she noted that inflation-adjusted rates have been rising, which could overburden an economy nearing Fed’s employment and inflation targets. Daly warned that such conditions could “break the economy,” stating her desire to prevent further slowing in the labor market.
In a separate speech, Boston Fed President Susan Collins reinforced this measured approach, stating that she supported Fed’s initial 50bps cut and sees further adjustments as likely.
Collins emphasized the importance of a “careful, data-based approach” as rates are lowered to support the economy while ensuring policy remains adaptable to incoming data.
Fed’s decision to cut interest rates by 50 basis points last month was backed by a “substantial majority,” but the minutes of the meeting revealed a more intense debate among policymakers. Only Governor Michelle Bowman dissented, while others showed mixed views on the appropriate pace of easing.
Some participants expressed that a 25bps cut would have been more suitable given inflation remains elevated, economic growth is stable, and unemployment is low. These participants argued that a smaller reduction could support a “more gradual path” for policy normalization, allowing time to assess the economy’s response. A few also noted that a 25bps move would signal a “more predictable path” to the markets.
Looking ahead, the split in views deepens. Nearly all participants agreed that the upside risks to inflation had diminished, while most observed increasing downside risks to employment. However, the timing and extent of further rate cuts remain debated.
Some participants stressed that waiting too long to ease policy could “unduly weaken” economic activity and employment, with significant costs if such a weakening were “fully under way”. In contrast, others warned that easing “too soon or too much” could risk “stalling or a reversal of the progress on inflation”. Given the uncertainty regarding the “longer-term neutral rate” and its implications, some said it’s “appropriate to reduce policy restraint gradually”.
In a speech today, Dallas Fed President Lorie Logan emphasized the need for a “more gradual path” in reducing the fed funds rate following last month’s 50bps cut. She stated that this approach would better balance the dual mandate of controlling inflation while maintaining healthy employment levels.
“Inflation and the labor market are in striking distance of our goals rather than seriously overheated,” Logan noted, explaining “less-restrictive policy” would help avoid overcooling the job market while bringing inflation sustainably back to target.
Logan also expressed concerns over uncertainties surrounding inflation, consumer spending, and economic activity, which remain robust despite ongoing monetary tightening. “I continue to see a meaningful risk that inflation could get stuck above our 2% goal,” she said.
“These risks suggest the FOMC should not rush to reduce the fed funds target to a ‘normal’ or ‘neutral’ level but rather should proceed gradually while monitoring the behavior of financial conditions, consumption, wages and prices,” Logan said.
ECB Governing Council member Martins Kazaks reiterated his support for lowering interest rates further, pointing to the ongoing economic weakness in the Eurozone.
Speaking during a webcast, Kazaks emphasized the need for continued monetary easing, suggesting that rates should be adjusted step by step.
“If inflation in the next year really returns to a sustainable 2%, interest rates have to be on a neutral level,” he said.
ECB Governing Council member Peter Kazimir struck a cautious tone today, signaling that while a rate cut next week is possible, he remains “not completely convinced” that ECB should move based on just one positive inflation reading.
Speaking to reporters, Kazimir acknowledged that September’s CPI dip below 2% for the first time since 2021 has fueled expectations of a rate cut, but he emphasized the need for a more comprehensive view of the economic data. “And we’ll have that key information in December,” he added
He also downplayed concerns about the risk of inflation undershooting the 2% target, stating, “I definitely don’t wake up in a sweat thinking that the inflation rate should be well below 2%.”
“On the contrary, we still lack sufficient confidence that we’re out of the woods and that the goal of sustainably being at 2% is entirely realistic,” he warned.
ECB Governing Council member François Villeroy de Galhau indicated today that a rate cut is “very probable” at the upcoming meeting next week.
Speaking on Franceinfo radio, Villeroy emphasized that this move “won’t be the last” in the current easing cycle. However, he added that the pace of future cuts will depend on how inflation evolves over time.
Villeroy stressed ECB’s commitment to gradual policy adjustments, saying the central bank will avoid making any “volatile moves.” He remarked, “We are used to acting with gradualism, which means resolutely but without making too significant steps.”
On inflation, Villeroy expressed confidence that price levels will stabilize at ECB’s 2% target by early next year in France, and later in 2025 across Europe. However, he noted that fluctuations could still occur in the coming months.
As widely expected, RBNZ cut its Official Cash Rate by 50bps to 4.75%. In its accompanying statement, the central bank emphasized that this move was deemed “appropriate” to achieve and maintain low, stable inflation while minimizing “unnecessary instability” in output, employment, interest rates, and the exchange rate.
RBNZ highlighted that economic activity in New Zealand remains “subdued,” with both business investment and consumer spending showing signs of weakness. Employment conditions are also softening, and low productivity growth is acting as a further constraint on activity.
The central bank pointed out that the economy is now in a state of “excess capacity,” which is encouraging adjustments in price- and wage-setting behavior, aligning with a low-inflation environment. Falling import prices are aiding the disinflation process.
Additionally, RBNZ noted that despite the rate cut, OCR of 4.75% is still “restrictive” and leaves monetary policy well-positioned to handle any near-term surprises.
Fed Vice Chair Philip Jefferson highlighted the shift in the balance of risks between the central bank’s two mandates: inflation and employment.
Jefferson noted at an event overnight that “risks to inflation have diminished,” while “risks to employment have risen,” bringing these factors into closer balance.
He emphasized that the robust performance of the labor market provided Fed with “headroom” to keep policy in restrictive territory for an extended period.
However, with unemployment drifting upward, now at 4.1%, and inflation closer to the 2% target, Jefferson acknowledged it was appropriate to consider “recalibrating” monetary policy.
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for over a decade. Empowering the individual traders was, is, and will always be our motto going forward.
Contact us: contact@actionforex.com
© ActionForex.com © 2025 All rights reserved.
US PPI at 0.0% mom, 1.8% yoy in Sep
US PPI for final demand was unchanged for the month in September, below expectation of 0.1% mom rise. PPI services rose 0.2% mom but PPI goods fell -0.2% mom. PPI less foods, energy, and trade services rose 0.1% mom.
For the 12-month period, PPI rose 1.8% yoy, down from prior 1.9% yoy, but above expectation of 1.8% yoy. PPI less foods, energy, and trade services rose 3.2% yoy.
Full US PPI release here.