The most recent US jobs report is expected to show that the labour market will continue to be strong through 2022 despite the fastest pace of monetary tightening in decades.
According to government figures that will be revealed on Friday, payrolls are anticipated to have increased by roughly 200,000 in December. Even though it would be a slowdown from the previous month, the rate of employment growth still indicates good hiring and a generally healthy labour market.
US Labor Market Remains Strong
The ongoing imbalance between labour demand and supply, which will probably be shown in the most recent job vacancies data on Wednesday, continues to push salaries higher.
According to the jobs data released on Friday, average hourly earnings increased by 5% in December compared to a year earlier, which is significantly faster than the 2% inflation target set by the Federal Reserve. At 3.7%, the unemployment rate is expected to remain historically low.
In the meanwhile, the minutes from the Fed’s December meeting, which were released on Wednesday, may shed some light on how the committee’s perception of inflation risk evolved despite indications to the contrary.
Other significant US Jobs Report data include weekly figures on unemployment insurance applications and the Institute for Supply Management’s most recent report on business activity at manufacturers and service providers.
What Bloomberg Economics Says:
The labour market is loosening, albeit more slowly than the Fed had anticipated. Overall, the labour market is still far from being in a position that is consistent with non-accelerating inflation.
—Eliza Winger, Niraj Shah, and Anna Wong. For a thorough analysis, see here.
The central banks of Israel and Sierra Leone may announce the first interest rate increases of 2023, while the inflation rate in the eurozone will likely indicate some slowing.
Check out last week’s events by clicking here. Our summary of upcoming events in the global economy is provided below.
To determine the economic impact of a spike in coronavirus cases in December, China’s purchasing managers’ indexes will be thoroughly examined.
China’s unexpected abandonment of its Covid Zero strategy, as revealed by the government’s official PMI on Saturday, caused economic activity, particularly in the service sector, to slacken to its lowest level since February 2020.
Later that week, a private sector PMI will be released in response to those statistics, and it is anticipated that it will show a more severe decline in manufacturing in the last few weeks of the year.
Exports in South Korea continued to fall in December, according to data released on Sunday, indicating a slowing in global demand as higher interest rates has a negative impact on spending.
In the meantime, Governor Rhee Chang-Yong stated in a New Year’s speech that the Bank of Korea should maintain the focus of its monetary policy on combating inflation and be ready to assist in market stabilisation.
Pay in Japan is predicted to continue to lag behind inflation in the latest wage data. Taiwan will report its trade figures at the end of the week, and export orders have already decreased due to a decline in the demand for semiconductors globally.
To learn more, see Weeks Ahead for Asia by Bloomberg Economics in its entirety.
Europe, the Middle East, Africa
With Croatia joining as its 20th member on Sunday, the euro area is larger than it was at the beginning of the year. A nation that only three decades ago rose from the ashes of war will start a new chapter with the adoption of the euro.
The issues the eurozone is facing will be highlighted by data throughout the week. On Friday, inflation is projected to have decreased to below 10%, providing some relief for the end of the year while still emphasising the size of the ECB’s challenge in getting consumer prices under control.
National news from the days prior is likely to paint a contrasting image. It’s likely that although France saw an increase in inflation, Germany and Italy saw a decrease.
The health of Europe’s largest economy will be shown by additional German data on unemployment, exports, and manufacturing orders as it battles what may be the worst recession now afflicting the area.
As with every year, the first week of 2023 is predicted to see virtually few public statements from ECB officials. One of them will be Chief Economist Philip Lane, who will speak to the American Economic Association on Friday.
The only engagements currently scheduled for Bank of England officials are speeches at the same conference next weekend by Chief Economist Huw Pill and Policymaker Catherine Mann. One of the few important numbers due in the UK on Wednesday will be the number of mortgage approvals.
While experiencing what may be the worst recession now impacting the region, other German figures on unemployment, exports, and manufacturing orders will show the health of Europe’s largest economy.
As is customary, the first week of 2023 is not likely to see many public statements from ECB representatives. When speaking to the American Economic Association on Friday, chief economist Philip Lane will be one of them.
The only appearances currently scheduled for Bank of England officials are speeches by Chief Economist Huw Pill and Policymaker Catherine Mann at the same conference the following weekend. Wednesday’s UK mortgage approval statistics will be one of the few important figures that are coming there.