US Jobs Report Likely to Show Subtle Progress for Fed: Eco Week

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(Bloomberg) — The latest reading of the US labor market on Friday is expected to show job growth on a more downward path that Federal Reserve policymakers are pursuing in their fight to curb inflation.

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Payrolls are expected to be up about 200,000 in November, a second month of declining earnings. Such growth, while subdued, is nevertheless consistent with solid hiring that will extend the Fed’s rate hike campaign into 2023. The report will be the last of its kind before the central bank’s final policy meeting of the year.

Data on job vacancies on Wednesday illustrates a still healthy hunger for labor.

Later that day, at a Brookings Institution event, Fed Chairman Jerome Powell will give his assessment of the economy as investors search for clues about the spike in benchmark interest rates.

Read more: Most Fed officials are trying to slow the pace of rate hikes soon

The jobs report is also expected to show moderate growth in average hourly wages. The Bloomberg survey median calls for an annual increase of 4.6%, which would be the smallest since August 2021 and a step in the right direction for Fed policymakers. The unemployment rate likely remained at 3.7%, just above its lowest point in five decades.

Among other key data from the US, Thursday’s income and expenditure report is forecast to point to a weakening of core inflation for October. As it simmers, the annual pace is still more than twice the central bank’s target.

Other reports include a survey of manufacturing purchasing managers, weekly unemployment claims, consumer confidence and the Fed’s Beige Book of regional economic conditions across the country.

What Bloomberg Economics says:

“Although middle- and lower-income households have depleted their excess savings accumulated during the pandemic, overall household balance sheets are still historically strong. Many lower-income households are getting a boost from state and local government stimulus. Older Americans are about to receive an 8.7% cost-of-living adjustment on their Social Security benefits. Residual savings from pandemic-era federal stimulus continue to keep household spending resilient.

–Anna Wong, Andrew Husby and Eliza Winger, economists. Click here for a full analysis

Elsewhere, the eurozone could reveal another double-digit inflation reading — the latest such report before the European Central Bank’s interest rate decision in December. Australian consumer prices are likely to rise again and interest rate hikes are expected from Thailand to southern Africa.

Click here for what happened last week and below is our recap of what’s to come in the global economy.

Asia

Factory output figures from Japan and South Korea will provide an indication of how slower global growth weighs on manufacturing there, while export figures from Korea will be the final health check on the state of global demand at the end of the week.

Japan’s labor market is likely to show continued tightness, but not enough to guarantee the wage increases that Bank of Japan Governor Haruhiko Kuroda is aiming for sustainable inflation.

Capital spending data may show that Japanese companies are still betting on post-pandemic recovery rather than a looming recession. The numbers will feed into next week’s revised GDP numbers.

Monthly inflation in Australia is expected to accelerate, although quarterly data will continue to exert more influence on policymaking.

Jonathan Kearns of the Reserve Bank of Australia will speak on Wednesday, while Governor Philip Lowe will speak on Friday.

Wednesday’s China PMI reports will be closely watched as the resurgence of Covid cases and lockdowns to contain the spread again hamper activity.

Nearly all economists expect the Bank of Thailand to raise its policy rate by a quarter point, bringing the benchmark back to pre-pandemic levels.

Europe, Middle East, Africa

A crucial week for eurozone monetary policy will feature both key data and high-profile comments from ECB officials.

Most important is the inflation reading for November, which is expected on Wednesday. Multiple officials have pointed to this as an important input to their final decision of the year, on Dec. 15, both as an indicator of price pressure and as a data point for their economic projections.

While inflation is expected to slow for the first time this year, inflation likely remained above 10% for a second month in November, economists say. Their average forecast is for a result of 10.4%, up from 10.6% in October.

Inflation data from the region’s four largest economies will also be released, with all economies except Spain forecast to slow at least slightly.

ECB President Christine Lagarde will testify at the European Parliament on Monday and will appear in Thailand later in the week. Chief economist Philip Lane will speak in Florence on Thursday. On Wednesday, the day of the inflation figures, a so-called non-monetary policy meeting of the Governing Council will take place.

Inflation figures will also be released in Switzerland. Although it is less than a third of that in the neighboring euro region, the consumer price report will take on additional significance as it is also the last recording before the Swiss National Bank’s interest rate decision on December 15, the same day as the ECB.

Swiss inflation is likely to remain at 3% in November, according to the median of 14 forecasts. That would be the sixth straight month in which it is at least a percentage point above the central bank’s 2% ceiling.

Looking south, Ghana’s interest rate decision on Monday could be a close call. Inflation has yet to peak at 40%, producer prices are rising and the cedi has fallen nearly 28% against the dollar since last month’s 250 basis point gain. At the same time, business confidence has fallen.

Rate setters in Lesotho and Namibia are expected to follow the South African Reserve Bank and raise interest rates on Tuesday and Wednesday respectively to protect their currency pegs. Also on Wednesday, Mozambique’s central bank will leave borrowing costs unchanged.

Botswana policymakers are likely to do the same for a second straight meeting on Thursday following a major cut in petrol prices that could ease inflationary pressures.

Latin America

October’s trade results herald the start of a busy week in Mexico, followed by unemployment, remittances, year-to-date fiscal balance, manufacturing and the Banco de Mexico’s quarterly inflation report.

The resilience of Latin America’s second-largest economy in the second half of 2022 could lead Banxico to revise its full-year production forecast, while the specter of a US recession forces the bank to revise its GDP forecast for 2023 of 1.6%.

After growing at 11.7% in 2021, things have gone downhill for Chile: the economy contracted in July-September, likely to do so again in the fourth quarter, and the central bank forecasts a negative print for 2023. Of the seven economic October indicators posted this week, expect some double-digit tumbles.

Consumer prices in Peru’s capital, Lima, appear to have peaked, but still-rising core inflation could be the lynchpin for a 17th consecutive rate hike at the central bank’s Dec. 7 meeting.

Brazil’s broadest measure of inflation – the IGP-M index – is expected to be down for a fourth month in November.

Brazil’s third-quarter manufacturing data released Thursday could mark a near-term high for Latin America’s largest economy, with analysts predicting a prolonged period of below-trend growth into 2024.

–With assistance from Malcolm Scott, Robert Jameson, Sylvia Westall, and Monique Vanek.

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©2022 Bloomberg LP

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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