The upcoming week promises a busy economic calendar, with a focus on labor market data and inflation figures across several key regions. Here's a breakdown of the key events and what they might mean for markets.
U.K. Labor Market Softening
The U.K. labor market is showing signs of softening, with a consensus for a 2.5K decrease in claimant count change, a 0.0% change in average earnings index 3m/y, and a 0.0% change in the unemployment rate. This data release will be crucial in assessing whether wage pressures are easing. Average weekly earnings for the three months to February slowed to 3.8%, the first time since 2020 when it fell below 4%. Job vacancies have declined to 711K, the lowest since 2021, and the number of payrolled employees fell by 65K compared with a year earlier. While wage growth is expected to ease further, analysts remain cautious about potential distortions from base effects and the recent increase in the National Living Wage.
Canadian Inflation and Energy Prices
Canada's inflation data is expected to show a CPI m/m increase of 0.6%, with the annual figure remaining at 2.6%. However, analysts from RBC predict a sharp pickup in headline CPI due to a surge in energy prices, particularly gas price spikes from March and April caused by the Middle East conflict. This conflict has also impacted oil prices, but other underlying price pressures are viewed as relatively contained. The Bank of Canada will closely monitor whether higher energy prices begin feeding into other inflation measures, and for now, this does not appear to be the case. Economic conditions remain soft, and with core inflation measures showing signs of moderation, the Bank is expected to maintain a cautious stance.
Australia's Labor Market Resilience
Australia's labor market is expected to show modest job gains, with a consensus for employment change of 15.7K and an unemployment rate of 4.3%. Recent data suggests the labor market remains broadly resilient, with employment expanding at a steady pace. However, Westpac analysts warn that April's figures may be distorted by seasonal factors, particularly the overlap with Easter holidays. Underlying labor market conditions have not shown clear signs of deterioration related to the Middle East conflict or recent rate hikes, and the softer April outlook appears to reflect caution around short-term volatility.
U.S. Housing Starts and Building Permits
In the U.S., housing starts are expected to show a slight decrease to 1.4M, while building permits are projected to rise to 1.38M. Despite a strong reading in March, analysts believe that residential construction is downshifting overall, with weather-related slowdowns in February affecting the March gains. Building permits have continued to trend lower year-to-date, down 2.6% as of March, with the single-family segment most affected by affordability pressures, softer demand, and elevated inventories. Multifamily activity has been more resilient, supported by steadier rental market conditions and improved financing costs.
Canadian Retail Sales Resilience
Canada's retail sales data is expected to show resilience, with core retail sales m/m at 0.9% and overall retail sales m/m at 0.7%. Household spending has remained steady, with RBC card transaction data showing resilience into Q1 2026 despite the new oil price shock. This indicates that consumer spending is holding up despite the economic challenges posed by rising energy prices.
In summary, this week's economic data releases will provide valuable insights into the state of various economies. The U.K., Canada, and Australia's labor markets are showing signs of softening, while the U.S. housing market is expected to cool down. Canada's inflation data may be impacted by energy price spikes, and Australia's labor market remains resilient despite recent challenges. The U.S. retail sales data is expected to show steady spending, despite the broader economic slowdown.
