Week in review
- U.S. Jan. ISM manufacturing and services PMI at 50.9 and 52.8 respectively
- U.S. Jan ADP payrolls hotter than expected at 183K
- China Caixin services PMI weaker than expected at 51
Week ahead
- U.S. CPI
- U.S. retail sales, industrial production
- Euro area industrial production
Thought of the week
Recent data continue to highlight the exceptional strength of the U.S. economy, but business sentiment remains a critical factor to monitor moving forward. Post-election sentiment has been notably positive, as evidenced by the NFIB Small Business Optimism Index reaching a six-year high and the January SLOOS survey indicating strong banking expectations for 2025. Additionally, there has been an increase in capital expenditure (capex) intentions since the elections, driven not only by solid economic data but also by the anticipation of more business-friendly policies, such as tax cuts and deregulation. However, recent tariff announcements have raised concerns that the policy environment may shift towards a less business-friendly stance, with significant uncertainties surrounding the magnitude, scope, and timing of these policies. Such uncertainty can dampen sentiment, as seen in 2018 when capex intentions and private investments declined. Sentiment swings are a key channel through which tariff shocks can impact the economy and markets, potentially leading to reduced corporate spending and lower equity valuations. Investors should closely monitor sentiment indicators and maintain agility and diversification as future policies unfold.
Capital spending intentions over the next 6 months
Average of regional Fed surveys*, diffusion index, seasonally adjusted
Source: Federal Reserve Bank of New York, U.S. Bureau of Economic Analysis, J.P. Morgan Asset Management. *Average includes the Chicago Fed, Dallas Fed, Kansas City Fed, New York Fed, Philly Fed and Richmond Fed manufacturing surveys of future capital expenditures **CAPEX refers to capital expenditure. ***Future capital expenditure intention is the difference between the percentage of businesses looking to increase capital expenditure vs the percentage of businesses looking to decrease capital expenditure over the next 6 months. Data reflect most recently available as of 10/02/25.
Market data
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