US jobs report is set to provide some solace to the Fed

(Bloomberg) – U.S. employers are gradually slowing hiring, and hourly earnings are moderate, providing some solace for Federal Reserve policymakers in their efforts. Their efforts to tackle inflation are still high.

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Government data on Friday is expected to show payrolls in the world’s largest economy increased by less than 200,000 in May, down from average monthly job growth of about 370,000 over the past year. Earnings are said to be up 0.3% month-over-month, when they posted their biggest gain in a year.

Another report next week is predicted to show the fewest open positions in two years. While the number of vacancies is still around 2 million above pre-pandemic levels, the fourth consecutive monthly drop in April employment numbers will underscore the gradual easing of working conditions. Tightening has helped boost inflation over the past year.

The latest photos of the labor landscape, which come after the White House and Republican negotiators reached a tentative deal to raise the US debt ceiling, will give Fed officials clues. about the impact of tighter credit conditions, higher interest rates and economic concerns.

Policymakers will meet June 13-14 to decide whether to raise another quarter of a benchmark after data this week showed faster inflation and a rebound in demand into early second quarter.

Fed officials expected to speak next week include regional bank presidents Thomas Barkin of Richmond and Patrick Harker of Philadelphia, along with board member Philip Jefferson.

What Bloomberg Economics says:

“May employment data is expected to show a slowdown in hiring – but not enough to reassure the Fed. The clutter of monthly payroll data masks a slowing hiring rate since late 2021 – although the labor market cooling has been slower than most analysis expected.

—Anna Wong, Stuart Paul, Eliza Winger and Jonathan Church, economists. For full analysis, click here

Further north, Statistics Canada will reveal first-quarter gross domestic product, providing key insight into whether the economy has cooled enough for the Bank of Canada to keep interest rates steady. next month or not.

Elsewhere, data showing slower eurozone inflation, surveys of Chinese purchasing managers and more GDP reports could grab investors’ attention.

Click here to see what happened last week, and below is our recap of what else is coming in the global economy.


China’s Purchasing Managers’ Index will be the bright spot in the region. On Wednesday, the official PMI expected by economists showed the decline in the manufacturing sector eased slightly, while the strong growth rate of the non-manufacturing sector is expected to slow.

Australia’s inflation numbers for April, due on the same day, could prove important to Reserve Bank observers. The median forecast is for a slight acceleration, to 6.4%, although some economists expect it to stay at the same pace or even slow down.

In India, first-quarter GDP data released on Wednesday could suggest a recovery, with both domestic and foreign demand helping to boost growth.

The Bank of Thailand is likely to raise interest rates by a quarter point on the same day, Sri Lankan officials will also give a verdict on monetary policy.

And in Japan, industrial production on Wednesday was expected by economists to increase for a third month in April.

Europe, Middle East, Africa

The latest eurozone inflation data on Thursday could draw significant attention, with the data expected to show disappointingly slow progress for the European Central Bank. Europe in reducing downward pressure.

Headline consumer price growth is believed to be softening to 6.3% in the 20-country currency area, while the basic measure of excluding volatiles such as energy is likely to be little changed. at 5.5%. Both readings will remain well above the ECB’s 2% target.

Previous country reports will likely emphasize regional differences. Spain’s inflation on Tuesday is expected to fall to 3.3%, while indexes in France, Italy and Germany the next day are all likely to remain above 6%.

Central bank governors from Croatia, Austria and Italy are among the ECB’s policymakers expected to speak, and the minutes of the May 4 meeting will be released on Thursday.

The institution’s latest financial stability report, due the day before, will also draw attention, especially after uncertainties in the banking sector in the US and Switzerland.

It will be quiet in the UK, starting the week with a public holiday, as will much of Europe. Bank of England official Catherine Mann’s speech on Wednesday and consumer lending data the next day were among the main events there.

Switzerland’s GDP on Tuesday could show the economy barely growing in the first quarter after flatlining for the previous three months. That’s still respectable considering the economy’s integration with the German economy, which is already in recession.

Sweden’s first quarter GDP data will be released on the same day, economists do not expect growth after the decline in the previous period. The European Commission predicts the country will face the worst economic recession of the European Union in 2023.

Several Russian reports will be released on Wednesday, including industrial production, weekly inflation, retail sales, wages and unemployment rate.

Looking south, Türkiye releases growth data on Wednesday. Elections there will be closely watched as President Recep Tayyip Erdogan faces Kemal Kilicdaroglu in the second round on Sunday.

Erdogan did better than the polls predicted in the first round on May 14, just below the 50% threshold needed to avoid another round of voting. The markets backed him to secure another term.

In Africa on Monday, Kenya’s interest rate-setting committee is poised to keep borrowing costs unchanged as it tracks the impact of a massive hike in March after inflation eased slightly last month.

The next day, Lesotho, whose currency is pegged to the South African rand, is likely to follow in the footsteps of its neighbor and raise interest rates. And on Wednesday, officials from nearby Mozambique could keep the benchmark rate steady for the fourth straight meeting.

Latin America

Minutes of the Banco Central de Chile May 12 meeting, to be released on Monday, will likely echo the central point of the post-decision statement: the slow pace of deflation leaves policymakers with a little choice but to hold at 11.25% for the foreseeable future.

Minutes of Banxico’s May 18 meeting will highlight the board’s concern that the inflation outlook is “complex and uncertain”, so Mexico’s central bank will need to keep interest rates high – now at a record 11.25% – and stable for a long time. Period.

Banxico’s quarterly inflation report to be released midweek could show economic output forecasts raised while inflation forecasts are revised down due to a strong peso and a surge in foreign investment due to the near future. edge.

Four of the region’s five major economies will release unemployment data. Unemployment is returning in Brazil and Chile after recovering from pre-pandemic levels, hovering near post-pandemic lows in Colombia, while at a record low of 2.39% in Mexico.

Latin America’s largest economy is likely to recover in the first three months of 2023 thanks to transient factors such as government social assistance and a good harvest. Most analysts expect Brazil to face at least four years of below-average growth, posing a significant challenge to President Luiz Inacio Lula da Silva’s agenda.

–With support from Robert Jameson, Laura Dhillon Kane, Monique Vanek and Paul Richardson.

(Updated with debt ceiling agreement in fourth paragraph)

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