The key events shaping the w/c 10 November 2025: Veterans Day, resolution on the US government shutdown, UK & Aus labour market reports, Euro area & UK GDP Q3
Recap from last week: Resilience Undermined by Policy Uncertainty in Oct
Momentum in the US economy remains difficult to assess, as we continue to rely almost exclusively on private sector surveys and data due to the government shutdown. Though at the time of writing, there are reports of a potential stopgap funding agreement that could see the longest US government shutdown end this week (source: Bloomberg).
The data we received last week reflected activity that remained surprisingly resilient, while sentiment became more pessimistic due to policy uncertainty. The US PMI survey data for Oct reflected still solid activity, but the outlook was undermined by elevated caution. Similarly, US consumer sentiment fell sharply again at the start of Nov amid shutdown concerns. The limited and mixed US data will likely remain a challenge for the FOMC as it grapples with the risks to its dual mandate. Last week, private sector data suggested little aggregate change in labor market conditions in Oct but highlighted pockets of weakness. Globally, both the Bank of England (BoE) and the Reserve Bank of Australia (RBA) kept policy unchanged, with both central banks signalling heightened uncertainty – but for structurally different reasons.
US Activity Tempered by Caution
The US headline PMIs mostly indicated a solid start to activity in Q4. The S&P PMIs showed moderate expansion in manufacturing and services, led by output and demand. Domestic activity led the way, while export demand remained in contraction. Finance and tech sectors were key drivers of the expansion, but reports noted signs of improving consumer demand. A question remains over the durability of manufacturing output growth, though, given the large increase in finished goods inventories. The price indexes still showed persistent inflation pressures, but provided little guidance on the magnitude of the pressures.
The stronger, unifying theme of the PMI surveys was the weaker/falling sentiment, citing trade policy (tariffs), political uncertainty (federal shutdown), and generally “mixed signals” from the economy. Reports suggested that weakening sentiment due to policy and political uncertainty during Oct (namely, the US-China trade flare-up and US government shutdown) may have held back activity and muddied the outlook for firms.
Consumer Sentiment: A Reaction to Policy
This pervasive uncertainty was clearly reflected in the prelim Michigan consumer sentiment survey for Nov. All three headline measures fell notably at the start of Nov, building on weaker readings from the two prior months. Declines in both the outlook and current conditions were widespread among consumers, citing “worries about the potential negative consequences of the ongoing federal government shutdown”. Importantly, since these primary sources of increased uncertainty are unlikely to be enduring, sentiment could rebound once the shutdown is resolved.
Labor Market Data Gap Challenges the FOMC
Ordinarily, this would have been the week for the Oct payrolls report. The absence of the US government data is particularly crucial now, as the FOMC continues to grapple with opposing risks to its dual mandate and internal division on the near-term policy path. Last week’s private sector data reflected some mixed signals on the US labor market, but little to suggest a material change from the cooling conditions. The PMI surveys showed little change in employment momentum across manufacturing and services, with some reports noting that the heightened uncertainty held back decisions on hiring in Oct. Conversely, the ADP payroll report recorded a stronger-than-expected increase in Oct at +42k (expecting +25k) – breaking a series of weaker payroll reports. Layoffs were mixed: the Challenger Job Cut Announcement survey recorded a notable increase in layoff announcements to 153k in Oct from 54k in Sept. The increase in layoffs in Oct was led mostly by ‘warehousing’ (UPS announcements), and technology. However, the technology job cuts (+33k) were offset by a notable increase in technology hiring announcements (+250k). Over the YTD, DOGE is still the largest contributor to job cut announcements. While the “DOGE” cuts are not a cyclical indicator, more cyclically related “cost-cutting” was cited as the top reason for layoff announcements this month.
US Fed speeches last week acknowledged the challenge of navigating the current environment with limited data. Fed Governor Cook supported the decision to cut at the last meeting, noting that she believed downside risks to the labor market were greater than the upside risks to inflation, and assessed policy as still ‘modestly’ restrictive. Meanwhile, Fed Vice Chair Jefferson indicated that the recent lack of progress on inflation might be due to “tariff effects,” and suggested underlying inflation may still be making progress toward 2%. He assessed policy as only ‘somewhat’ restrictive and agreed that it makes sense to ‘proceed carefully’ now as the Committee approaches the neutral rate.
Global Central Banks: Pause Amid Uncertainty
Caution and uncertainty were also themes reflected in the two key central bank decisions last week – but for different, structural reasons.
The RBA kept policy settings unchanged as expected, and the decision was unanimous. The recent higher-than-expected inflation, recovery in demand, still tight labour market conditions, and easing in financial conditions have now increased the uncertainty over the assessment that monetary policy remains a “little restrictive”. Guidance was further adjusted to now reflect a ”heightened level of uncertainty about the outlook in both directions”. The Governor suggested that the RBA “may cut rates, or we may not”. New forecasts for underlying inflation show the trimmed mean remaining above the target band through to H2 2026 – suggesting an extended pause is possible if data evolve as per the forecasts.
The BoE also kept policy unchanged, but it was an extremely divided 5-4 decision, with four members voting for a 25bps cut. Risks of greater inflation persistence have become less pronounced recently, while the risk to medium-term inflation from weaker demand has become more apparent (concerns over slack building in the economy) – such that these risks are now more balanced. Amid the voter split, the Committee agreed on “waiting for additional evidence before reducing Bank Rate further”. While settings were deemed as ‘restrictive’, the internal division highlighted different views on the degree of restrictiveness. The decision noted that inflation was deemed to have peaked – an important signal for the outlook on rates. The extent of further cuts will depend on the inflation outlook – as disinflation continues, restrictiveness will be removed.
Outlook for the week ahead: Awaiting Shutdown Resolution
The expected resolution of the US government shutdown this week will see a shift from political gridlock. While the immediate policy risk of the shutdown may be receding, market participants must now brace for the uncertainty of when and how the official data flow will normalize – and importantly, what the data will say.
Assuming the shutdown ends this week, we’ll await guidance from statistical agencies over the timeline for scheduled releases.
For the immediate week, the US economic calendar remains minimal, keeping private sector surveys in focus. Outside of the US, key data releases in the UK and Aus will serve as essential validation (or challenge) to the recent policy decisions by the BoE and the RBA.
Tuesday, 11 Nov is Veterans Day.
Key factors & events to watch this week:
US Government Shutdown
Resolution of the US government shutdown and the resulting schedule of data releases.
US Data
Private sector reports are still in focus for this week, but will offer little further insight into the near-term outlook.
- NFIB Small Business Optimism Index will gauge sentiment in the small business sector, which, as highlighted in Part 1, may have been dampened by policy uncertainty in Oct and early Nov.
- The ADP preliminary 4-weekly payroll change will be updated now each week on a Tuesday. The prior 4-weekly change at the week ending 11 Oct was +14k. The note from ADP on the new release is here.
- If the shutdown ends early in the week, the initial jobless claims series could be released this week.
- There will be numerous Fed speeches through the week – see the official Fed calendar. Fed Governor Waller is scheduled to speak this week on “Payments” at a Fintech conference hosted by the Philadelphia Fed.
UK data
- UK labour market data for the 3-months ending Sept is expected to see the unemployment rate edge higher to 4.9% – this may not allay concerns over slack building in the economy.
- GDP for Q3 is expected to edge down to +0.2% QoQ, from a modest +0.3% in Q2.
Australian Labour Market for Oct
- Employment growth is expected to edge higher to +20k from +15k in Sept. The unemployment rate is expected to fall to 4.4% from 4.5% in Sept. This may also support the assertion that some tightness remains in the labor market.
Euro Area Data
Euro area GDP growth for Q3 is expected to be confirmed at +0.2%.
China Activity Data
The remaining activity data from China will be released this week. This comes on the heels of the step down in Chinese export and import growth in Oct. The activity data is expected to moderate slightly, with retail sales slowing to +2.8% in Oct from +3% in Sept and industrial production slowing to +5.5% from +6.5% in Sept.
This week, the US Treasury will auction and settle approx. $532bn in ST Bills, raising approx. $37bn in new money. The US Treasury will also auction the 3-year and 10-year Notes, and the 30-year Bond this week – they will settle early next week.
QT this week: Approx $17.2bn in ST Bills will mature on the Fed balance sheet and will be reinvested.
More detail (including a calendar of key data releases) is provided in the briefing document – download the pdf below:
Comments and feedback are welcome. Please email me at kim.mofardin@marscapitalpartners.net
