Is the US Labor Market Cooling?

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Is the US Labor Market Cooling?

U.S. employment is expected to slow in June after a surprise two-month rise that has justified the Federal Reserve to continue raising interest rates this year.

US employment is expected to increase by 200,000 in June, down from 339,000 in May, the Labor Department said on Friday, according to a Bloomberg survey of economists.

The unemployment rate is expected to drop to 3.6% from the current 3.7%. Average hourly earnings growth is expected to stabilize at 0.3% m/m.

The U.S. job market has been much more resilient this year than economists and analysts expected, holding up at pre-pandemic levels despite the Fed’s breakneck pace of rate hikes over the past 15 months. .

The median estimate in a Bloomberg survey of economists had underestimated the number of major monthly payrolls for the past 14 months. However, the unemployment rate is slowly starting to rise.

The June jobs report will be a key part of the deliberations at the Fed’s next policy meeting in July. At its June meeting, the Fed signaled it was ready to raise rates two more times this year, possibly as early as July. Investors in futures markets now see an 84% chance that the Fed will raise rates by a quarter of a percentage point. Kate Duggid

Can the Eurozone Economy Return to Growth?

The eurozone economy has contracted slightly over the past two quarters and next week will provide more clues as to whether it shows signs of breaking out of its rut.

High inflation and rising borrowing costs have eroded the purchasing power of many European households over the past year, but there are recent signs that higher wages and lower energy prices are giving consumers a boost.

That boosted month-on-month retail sales growth in France, Spain and Germany in May, and when the figures are released on Friday, figures across the eurozone are likely to return to growth for the first time since January. is shown.

There could be even more encouraging news for Germany’s struggling manufacturing sector this week. Thursday’s industrial orders data is expected to show a partial recovery with monthly growth of 3% in May, while Friday’s production data is expected to rise 1%.

However, surveys of businesses and households show activity and demand to slow again in June. Commerzbank chief economist Jörg Kraemer is skeptical of a sustained recovery, predicting that “Germany and the euro zone economy will contract again in the second half of the year.” . Martin Arnold

Where is the Chinese economy headed?

After a flurry of lackluster economic data from China, investors will look to manufacturing and services announcements next week for clues about the health of the world’s second-largest economy.

A Bloomberg survey of economists said Monday’s release of the Caixin Manufacturing Purchasing Managers Index is expected to hit just 50, crossing the line between expansion and contraction in the PMI.

Meanwhile, the goods and services PMI on Wednesday is expected to fall to 56.2 from 57.1 in May, according to another Bloomberg poll.

Manufacturing growth in June is expected to remain zero this week Official Manufacturing Readsranked 49th, marking the third straight month of contraction among the mostly state-owned manufacturers subject to government surveys. Monday’s figures will reflect the situation in small and private factories, which employ the majority of workers in the sector.

“Aside from a temporary recovery in manufacturing after the zero-corona measures were shelved in early December 2022, China’s manufacturing sector is limping,” said Robert Carnell, head of Asia-Pacific research at ING. said.

Carnell said the latest negative performance in the official manufacturing PMI “wasn’t all that surprising,” and the slowdown in non-manufacturing activity reported on Friday suggests much of this year’s service sector growth has been “pentant.” He said that he confirmed that it was brought about by “up”. Demand from consumers, hitherto constrained by China’s zero-corona policy, is rising.

But he warned, “There is a limit to how long this situation can last.” hudson rocket