FILE PHOTO: Signage for a job fair is seen on 5th Avenue in Manhattan, New York
WASHINGTON: Healthy US employment gains continued in March while wage growth moderated, indicating the nation’s labour market is poised to keep stoking the economy with limited risk of an inflation resurgence.
Payrolls in the world’s largest economy are seen increasing by at least 200,000 for a fourth straight month, according to a Bloomberg survey of economists.
Average hourly earnings are projected to climb 4.1% from the same month last year, the smallest annual advance since mid-2021.
Resilient hiring is keeping demand and the economy moving forward at the same time inflation is slowing, albeit unevenly. It’s also allowing Federal Reserve (Fed) policymakers to hold off reducing interest rates as they await further declines in price pressures.
Fed chairman Jerome Powell, tomorrow, headlines a large cast of Fed policymakers who are due to speak this week. Among others appearing are John Williams, Adriana Kugler, Mary Daly, Austan Goolsbee, Lorie Logan and Thomas Barkin.
An increase in labour supply is helping to limit wage pressures that otherwise would risk filtering through to a sustained pickup in inflation.
Last Friday’s payrolls report is also forecast to show the unemployment rate inched down to 3.8%, just below a two-year high hit in February, suggesting the job market is losing a little momentum.
“The two major surveys used to create the jobs report appear to capture different aspects of the US economy.
“Spending on services by those benefiting from asset price appreciation – mostly baby boomers – has supported employment in leisure and hospitality and health care.
“At the same time, reduced demand from the less well-off part of the population has translated to slowing business sales, and reduced hiring or increased layoffs in other sectors.
“We expect that dichotomy to once again show up in the March report, sending mixed messages to policymakers,” says Bloomberg economists Anna Wong, Stuart Paul, Eliza Winger and Estelle Ou.
February job openings data today will offer a glimpse into labour demand. While economists project a decline, vacancies remain above their pre-pandemic level.
Other reports in the coming week include a pair of purchasing managers surveys from manufacturers and service providers.
Turning north, surveys from the Bank of Canada will offer insights into inflation expectations ahead of its April 10 rate decision. Canada’s jobs data will be released concurrently with the US numbers, and trade data will also be published.
Elsewhere, a raft of key inflation numbers are due from the eurozone to Turkiye to Colombia. Central banks from India to Chile will set interest rates.
China’s official purchasing managers index (PMI), published last Sunday, showed manufacturing activity expanded in March for the first time since September, a further sign that the world’s second-largest economy is stabilising.
The Caixin manufacturing gauge the following day is seen showing a smaller expansion in its measure of activity that focuses more on the private sector.
Separate data showed that China’s home sales slump dragged on in March, signalling a much-hoped turnaround for the sector isn’t in sight yet.
PMIs from economies throughout the Asia-Pacific region the same day will give a feel for the regional growth outlook.
The Bank of Japan’s (BoJ) quarterly Tankan survey will probably reflect a continuing divergence in sentiment by industry.
The gauge for large manufacturers is seen slipping for the first time in a year, while the reading for large non-manufacturers may soar to a 32-year high.
Smaller firms will likely be pessimistic, an outcome that could jeopardise wage gains at small and medium enterprises needed to power the virtuous cycle sought by the BoJ.
South Korean export growth is forecast to cool in March, while consumer inflation data out today probably eased a tick there.
Price gains may speed up moderately in Indonesia and the Philippines. Declines in Thai prices are predicted to ease.
The Reserve Bank of Australia releases minutes from its March meeting today, with two board members due to speak during the week. The Reserve Bank of India is expected to keep its main policy rates steady on Friday.
Europe, Middle East, Africa
After last week’s consumer-price reports from France, Italy and Spain, and following a region-wide holiday on Monday, further puzzle pieces will emerge revealing the strength, or otherwise, of eurozone pressures.
German inflation today is anticipated to show further weakening toward the 2% target. The European Central Bank will unveil its survey of consumer expectations the same day.
The eurozone inflation number will be published tomorrow. Outcomes anticipated by economists at 2.5% – and 3% for the underlying gauge that strips out volatile energy and food items – may keep officials only inching toward cutting rates in the coming months as they gauge how their policy is constricting growth.
Governing council members have until the end of day tomorrow to share their views before a blackout period kicks in ahead of their April 11 decision.
Further clues about their thinking may emerge the following day, when an account of their last meeting is published.
On Thursday, Sweden’s Riksbank will release minutes of its March decision, shedding light on an outcome that saw officials firm up plans to cut rates at some point in the second quarter.
Switzerland will release inflation numbers on Thursday. While an acceleration is expected, if it comes in as forecast at 1.4% that would still be well below the ceiling targeted by the Swiss National Bank, which recently cut rates.
And in Turkiye, where the central bank has been aggressively tightening, data tomorrow may show another acceleration in consumer-price growth toward 70%.
Several monetary meetings will take place this week in Europe and Africa.
Latin America
Chile on Monday posted February gross domestic product proxy data, likely cementing the view that its economy is on the rebound.
The central bank today is all but certain to trim borrowing costs for a sixth straight meeting, with an early consensus forecasting a 75 basis-point cut to 6.5%, though an uptick in consumer prices and wobble in inflation expectations may put a smaller reduction in play.
Brazil releases a raft of data, including monthly trade, industrial production, current account, foreign direct investment and primary and nominal budget figures.
The week’s highlight in Mexico comes with the posting of the minutes of Banxico’s March 21 decision to cut the key rate to 11%.
While the post-meeting communique tilted hawkish, the minutes may push that vibe up a notch or two. — Bloomberg
