US jobs report likely to show subtle progress for Fed
NEW YORK: The latest reading of the US labour market on Friday is expected to show job growth on more of the downward glide path sought by Federal Reserve (Fed) policy makers in their fight to beat back inflation.
Payrolls are projected to have risen about 200,000 in November, a second month of decelerating gains.
Such growth, while moderating, is nonetheless consistent with solid hiring that will extend the Fed’s rate-hiking campaign into 2023. The report will be the last of its kind before the central bank’s final policy meeting of the year.
Job openings data on Wednesday are seen illustrating a still-healthy appetite for labour.
Later that day, at a Brookings Institution event, Fed chair Jerome Powell will offer his assessment of the economy as investors seek clues about the peak in the benchmark interest rate.
The jobs report is also forecast to show moderating average hourly earnings growth. The Bloomberg survey median calls for a 4.6% annual increase, which would be the smallest since August 2021 and a step in the right direction for Fed policymakers.
The unemployment rate probably held at 3.7%, just above a five-decade low.
Among other key US data, the income and spending report on Thursday is forecast to indicate a softening in core inflation for October. While simmering down, the annual pace is still more than twice the central bank’s goal.
Other reports include a survey of manufacturing purchasing managers, weekly jobless claims, consumer confidence, and the Fed’s Beige Book of regional economic conditions across the country.
“Even though mid to lower-income households have depleted excess savings built up during the pandemic, household balance sheets are still historically strong in aggregate. Many lower-income households are getting a boost from state and local government stimulus checks. Older Americans are about to get an 8.7% cost-of-living adjustment to their social-security payments. Residual savings from pandemic-era federal stimulus continue to keep household spending resilient,” according to Anna Wong, Andrew Husby and Eliza Winger of Bloomberg Economists.
Elsewhere, the eurozone may reveal another double-digit inflation reading – the last such report before the European Central Bank’s December rate decision. Australian consumer prices are likely to increase again, and rate hikes are expected from Thailand to southern Africa.
In Asia, factory output figures from Japan and South Korea will give an indication of how slower global growth is weighing on production there, while export figures from South Korea at the end of the week will offer the latest health check on the state of global demand.
Japan’s labour market is likely to show continued tightness, though not enough to guarantee the wage gains Bank of Japan governor Haruhiko Kuroda seeks for sustainable inflation.
Capital spending data may show Japanese firms are still betting on a post-pandemic recovery rather than a looming recession. The numbers will feed into revised gross domestic product figures the following week.
Australia’s monthly inflation rate is expected to speed up, though quarterly figures will continue to hold more sway on policy making. The Reserve Bank of Australia’s Jonathan Kearns is set to speak on Wednesday, with governor Philip Lowe giving remarks on Friday.
China’s Purchasing Managers’ Index reports on Wednesday will be closely watched as the resurgence in Covid cases, and lockdowns to contain the spread, hamper activity yet again.