US jobs report shows resilient labor demand: Eco Week

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(Bloomberg) – Employers in the United States likely added workers at a more moderate but still healthy pace last month, with the unemployment rate holding near its lowest level in decades, suggesting demand for labor resilient workforce even as the economy cools.

The latest government payroll tally on Friday is expected to show an increase of 273,000 for June, based on the Bloomberg survey median. The unemployment rate is expected to remain at 3.6%, while the average hourly wage is likely up 5% from a year ago.

Wage growth is well above its long-term average and steady hiring suggests Federal Reserve policymakers will go ahead with another 75 basis point rate hike this month. . Investors will get a preview of their thinking in the June meeting minutes, which are due for release on Wednesday.

Data earlier today is expected to show job vacancies remained elevated in May, indicating that businesses are still keen to hire despite a slowdown in economic activity and worries about the outlook.

The number of vacancies is expected to fall from 11.4 million in April to 11 million. That’s still close to the record high of 11.9 million in March. Labor market tensions are of concern to Fed officials as they risk fueling a spiral of accelerating wage growth and inflation.

Other US economic data in this holiday-shortened trading week: the Institute for Supply Management will release its services index for June and the Fed will release a report on consumer borrowing in May. Government figures on the May trade deficit are also expected.

What Bloomberg Economics says:

“Even if ‘soft landing’ ultimately turns out to be as taboo a term as ‘transient inflation’, there is reason to believe that the labor market will not fall off a cliff this year. The openings are high and slowing economic growth reflects uneven patterns below the surface. The service sector recovery is still underway, favoring sectors such as leisure and hospitality, as well as education and health services.

–Anna Wong, Yelena Shulyatyeva, Andrew Husby and Eliza Winger, economists. For a full analysis, click here

Elsewhere, the European Central Bank will release the minutes of its June deliberations, Brazil’s double-digit inflation may have risen again and Canada is also releasing jobs data. Currency officials in Australia, Israel, Peru and Poland are among those planning to continue raising rates.

Click here to see what happened last week and below is our summary of what is happening in the global economy.

Asia

The Reserve Bank of Australia meets on Tuesday, with another rate hike expected as inflation continues to soar. Consumer confidence is falling and questions remain about the strength of the central bank’s resolve to bring soaring prices under control.

South Korean inflation figures are due on the same day. The country’s finance minister has already warned that price growth is expected to reach 6% in the coming months.

In Japan, Prime Minister Fumio Kishida will find out whether wages follow prices ahead of a national election he wants to win convincingly to bolster his leadership.

After that, household spending data released on Friday will show whether inflation is starting to weigh on a post-pandemic consumer recovery.

Malaysia’s central bank meets on Wednesday, and monetary authorities in the troubled economies of Pakistan and Sri Lanka set policy later in the week.

  • For more, read the full Asia Week Ahead from Bloomberg Economics

Europe, Middle East, Africa

Fresh from their annual retreat in the Portuguese resort town of Sintra, ECB policymakers will continue discussions on developing a new anti-crisis tool as they prepare to raise rates, with an increase of a quarter point on July 21 considered a “concluded fact”. by some.

On Thursday, the minutes of their June decision, which preceded the commitment to create a crisis measure, could offer clues to their intentions. Events that may also provide opportunities are the appearances of Vice President Luis de Guindos and Bundesbank Chief Joachim Nagel on Monday, and President Christine Lagarde on Friday.

While a new inflation record in the eurozone, 8.6% in June data released on Friday, could encourage them to rise, the ECB will also want to look at the health of growth. This could put the spotlight on the figures for Germany, the region’s largest economy. Monday’s export data, Wednesday’s factory orders and Thursday’s production could catch their attention.

Central banks in Eastern Europe are already well oriented towards tightening, and this should continue over the coming week. Romanian officials could raise rates by 75 basis points on Wednesday, and Polish policymakers could do the same the next day.

Further south, Israel is expected to raise its policy rate by at least 50 basis points on Monday, when Governor Amir Yaron also provides guidance.

In Turkey, data from the same day is expected to show annual inflation approaching 80% in June as the central bank persists with its unorthodox policy of low rates. The price outlook could be further complicated by plans to raise the minimum wage to restore some purchasing power to low-income workers.

  • For more, read Bloomberg Economics’ full week for EMEA

Latin America

Colombia and Mexico publish the minutes of their last monetary policy meetings, where each central bank raised a record amount.

The former increased borrowing costs by 150 basis points to 7.5%, the latter increased by half to bring the key rate to 7.75%. Economists see a good chance that the famed Banxico hawk will match its June move into August.

Uruguay’s central bank is set to raise borrowing costs for an eighth consecutive meeting, while Peru is almost certain to extend a record tightening cycle, likely with a half-point hike to 6%.

Brazilian industrial production figures for May are expected to firm up from low levels in April.

Analysts expect June data to show Colombia’s inflation surged above 9.6%, which would be the fastest pace since 2000, and to a new two-decade high of nearly 8% in Mexico.

Closing out the week, the preliminary forecast sees June readings from Chile and Brazil serving as alarm and disappointment respectively.

Consumer prices in Chile may have jumped 12.6% from a year earlier – a 27-year high – while in Brazil they may have rebounded almost 12%, l inflation in both economies having largely erased record tightening cycles.

  • For more, read the full Latin America Week Ahead from Bloomberg Economics

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