Week ahead: Manufacturing and Services PMI, US Unemployment and the last data before Trump takes office.

The first full week of 2025 brings a series of high-impact economic indicators that can drive global market sentiment. While Europe remains focused on inflation stability, the United States faces challenges and opportunities in the services and manufacturing sectors. The release of US Labor Market data will help to create a better understanding of the possible next steps in the monetary policy to be adopted by the FED. This week also marks the release of the last economic data before Donald Trump’s inauguration, which can work as a benchmark to evaluate his term in the future.

Here are the week’s key events:

Monday, January 6th: German Inflation and Services PMI from the US

German Inflation (CPI)

German Consumer Price Index (CPI) data will be one of the first focuses of the week. Recent readings indicate inflation is around 2%, which is in line with the European Central Bank’s (ECB) medium-term target. As Europe’s largest economy, Germany plays a crucial role in maintaining the bloc’s economic stability. Data confirming stability could bolster confidence in the euro, but any significant deviation could reignite discussions about the ECB’s monetary policy.

US Services PMI

In the US, the services sector PMI will be closely watched. The previous reading of 56.1 showed a booming sector, but the market is now expecting a rise to 58.5. This growth suggests a buoyant economy but also raises inflation concerns in the medium term. If the data beats expectations, it could put pressure on the Federal Reserve (FED) to adopt a more aggressive stance on raising interest rates in the future.

Tuesday, January 7th: Eurozone inflation and Manufacturing PMI

Eurozone Inflation

Inflation figures in the Eurozone will be in the spotlight. As in Germany, recent Eurozone inflation readings have been around 2%, in line with the ECB’s medium-term target. This subdued inflation environment could pave the way for discussions about future interest rate cuts, especially if the bloc’s economic indicators continue to show signs of slowing.

US ISM Manufacturing PMI

Unlike the services sector, the US manufacturing sector is facing persistent challenges, with PMI readings below 50, indicating a possible scenario of economic contraction. This trend reflects difficulties not only in the US market but also in several European economies. A recovery in this indicator would be an encouraging sign, but its continued weakness could be a significant drag on global economic growth in 2025.

Wednesday, January 8th: ADP and FOMC Meeting Minutes

ADP NonFarm Employment Change

The ADP report, which measures private-sector job creation, is often seen as a preview of the Nonfarm Payroll (NFP) report, which will be released on Friday. The previous reading fell short of expectations, raising concerns about the pace of growth in the labour market. With the Fed closely monitoring employment as one of the pillars of its monetary policy, this indicator will have significant weight in understanding the labour market in the US.

FOMC Meeting Minutes

The minutes of the latest Federal Open Market Committee (FOMC) meeting will be a highlight of the day. Investors will be looking for details on the deliberations that led to recent monetary policy decisions and, more importantly, trying to identify clues about the Fed’s next steps. With the economy showing mixed signals, the minutes could provide crucial insights into the central bank’s strategy to balance inflation and economic growth.

Thursday, January 9th: Initial Jobless Claims and the labour market in the US.

Initial Jobless Claims

The weekly U.S. Initial Jobless Claims data is an important piece of the labour market puzzle. Together with the ADP figures to be released on Wednesday, they help to form a clearer picture of the health of employment in the US. A strong labour market could justify a tighter stance from the Fed, while signs of weakness could raise expectations for additional stimulus.

Friday, January 10th: Unemployment in the US and Delta Air Lines (DAL) Earnings.

NonFarm Payroll (NFP)

The NFP will undoubtedly be the most eagerly awaited indicator of the week. The previous reading reported 227k jobs created during the month of December, and the market will be watching closely to see if that number is surpassed. A higher reading could indicate a robust and buoyant labour market, increasing the likelihood of further rate hikes by the Fed.

U.S. Unemployment Rate

The unemployment rate, which was at 4.2% at the last reading, will also be released. This reading is slightly above the lowest reading of 2023, which was 3.4%. This means that since May 2023, unemployment has increased by almost 1%, which could cause the Fed to consider further interest rate cuts to stimulate the economy. This data is particularly significant as it will be the last reading before Donald Trump is inaugurated as president. It could serve as a benchmark for future analyses of economic performance during his term, especially in light of his promises to revitalise the labour market.

Delta Air Lines Financial Report (DAL)

In the corporate sector, Delta Air Lines will release its 2024 financial report. With an impressive 14.76% growth in Total Revenues and a staggering 249.7% increase in Net Income in 2024, expectations are high. Considering the stock is up over 50% through 2024, the question is: Will Delta Air Lines numbers maintain its growth momentum in 2025?

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