A packed week of economic releases will put US housing construction, inflation in Canada, the UK and Japan, and China’s third-quarter growth in focus. High mortgage rates are expected to weigh on US homebuilding, while higher energy costs could lift headline inflation in Canada and Britain. Japanese price pressures also appear to be building again, with the data likely to inform central-bank policy expectations.
US housing starts face continued pressure
US housing starts for September are due Tuesday. Residential construction declined in four of the past five months, and mortgage rates moved above 7% in late September, further reducing affordability for buyers. A survey by the National Association of Home Builders showed a marked deterioration in builders’ sales expectations, alongside more frequent price cuts.
Multifamily construction is also facing higher financing costs and moderate rent growth. September building permits, reported earlier, fell, pointing to a possible further decline in starts. The market expects US housing starts to drop 2.0% in September, to an annualized rate of 1.25 million units.
Canada inflation in focus ahead of Bank of Canada meeting
Canada’s September Consumer Price Index is due Monday, just ahead of the Bank of Canada’s October 28 policy meeting. Recent oil-price gains have pushed headline inflation higher, but core measures remain near 2%, with little sign so far that price pressures are spreading broadly beyond energy.
The market expects annual headline CPI inflation to rise to 3.2%, mainly reflecting higher oil prices in September, while core inflation holds around 2%. A softer labour market and uncertainty over the growth outlook still support a wait-and-see approach by the central bank. But another firm inflation reading could strengthen expectations of a rate increase as early as December.
UK and Japan face renewed inflation pressure
The UK’s September CPI report is due Wednesday. Higher energy prices are expected to lift headline inflation from 3.1% to 3.5%, with a 0.4% monthly increase. Core inflation is forecast to rise from 2.6% to 2.8%, up 0.2% on the month. The Bank of England is watching core prices and wages for signs of second-round effects. There is little evidence of broad price and wage spillovers so far, but the risk grows the longer energy costs remain elevated.
The UK unemployment rate is expected to keep rising, although economic activity has been slightly better than previously anticipated. Underlying wage growth remains above a pace consistent with the inflation target. If core inflation also moves higher, expectations of a 25-basis-point Bank of England rate hike in November would gain support, potentially taking Bank Rate to 4.00%.
Japan’s September CPI is due Friday. Headline inflation is expected to reach 2.3%, while “core-core” inflation—which excludes fresh food and energy—is forecast to rise to 2.8%. Tokyo’s September headline and core inflation both reached 2.7%; its core-core measure rose from 2.0% to 3.0%, providing a stronger signal ahead of the national release.
Higher energy prices, the yen’s earlier depreciation and stronger demand linked to artificial intelligence could all add to the cost of durable goods. The Bank of Japan raised its policy rate to 1.25% in September. A further acceleration in national core inflation would strengthen the case for continued policy normalization. Markets expect a 25-basis-point increase in December, which would take the rate to 1.50%.
China growth outlook hinges on exports and policy support
China’s third-quarter GDP is due Monday. Growth is expected to edge up from 4.3% to 4.4% year over year, with external demand and policy support still providing most of the momentum. Exports—particularly demand for semiconductors and other high-tech products—are expected to remain the main support for net exports.
Industrial production grew 5.2% year over year in August, while September’s manufacturing Purchasing Managers’ Index pointed to continued resilience in industrial activity. Retail sales are expected to improve from August’s 0.4% growth, but weak consumer confidence and continued pressure in the property market are likely to constrain a domestic-demand recovery. More targeted policy support could cushion those pressures, though growth through year-end is still expected to rely chiefly on exports and policy backing.