Did US job growth slow in November?
Economists expect the US economy to continue adding jobs in November despite rising interest rates and fears of a looming recession.
Wall Street expects the number of people on U.S. payrolls to have risen by 200,000 in November from the previous month, according to economists polled by Reuters. This would be the weakest job creation since December 2020 and down from the 261,000 jobs created in October. However, the robust employment gains would show strength in an already tight labor market that contrasts with other sectors of the economy, such as the housing market or retail sales, which are struggling under the aggressive pace of increases. interest rates, according to Sandra Horsfield, economist at Investec.
Job creation in the United States has been stronger than expected over the past seven months, strengthening the case for the Federal Reserve’s decision to raise its key rates from an all-time high of 0.75. percentage point in the last four meetings as it battles high inflation. “The Fed is hoping for some easing in labor market conditions in next week’s report to justify a lower key rate hike at its next meeting in December, as is widely expected,” Horsfield said.
Kevin Cummins, chief economist at NatWest, said many companies have signaled they may need to reassess their hiring needs, but “so far at least there still appears to be enough backlogs at other companies to help sustain strong year-end job growth.” He expects U.S. job creations to slow in 2023, however, as the economy is likely to tip into a recession which he predicts will last until the first half of next year. Valentine of Rome
How is the Chinese manufacturing sector doing?
Conflicting currents shook the Chinese economy in November, blurring the picture of the strength of the country’s vast manufacturing sector. The Caixin-Markit index of manufacturing purchasing managers should provide clues.
The government’s intermittent signals that it would relax some tenets of its strict zero-Covid policy were set against record daily virus cases and renewed lockdowns. Meanwhile, China’s state banks extended a series of mammoth credit lines to the country’s real estate sector – a major driver of manufacturing activity – as global trade and demand for Chinese goods showed signs of slowing. .
Barclays analysts are predicting a reading of 49 for Caixin PMI data, below the 50-point threshold that separates contraction from expansion, and an accelerating slowdown signaled by last month’s reading of 49.2. Consensus estimates for the country’s official manufacturing PMI, which places more emphasis on large state-owned companies than Caixin’s, also forecast a reading of 48.9.
While analysts say the global trade slowdown will hit manufacturers from Taiwan to South Korea this month, in China there are the added complications of living below zero-Covid. And while home lines of credit and limited Covid easing may have boosted market sentiment, manufacturers should still feel the pinch.
“Official manufacturing and non-manufacturing PMIs for China are expected to contract deeper . . . as the number of Covid cases increased, affecting both factory and retail operations,” the authors wrote. analysts at ING, the Dutch bank, “This should also be reflected in Caixin’s manufacturing PMI figures, which could show a bigger contraction, as smaller factories are more affected given the difficult logistics situation.” William Langley
Will inflation in the euro zone fall?
Inflation has risen in the eurozone for 16 consecutive months, but economists expect that trend to have come to a halt in November. If they’re right, that might be enough to convince the European Central Bank to scale back interest rate hikes at its meeting next month.
The harmonized consumer price index for the 19-nation single currency bloc is expected to rise 10.4% in the year to November, according to a Reuters poll of economists.
While still painfully high, this would mark a significant change in direction, down from the eurozone’s all-time high inflation of 10.6% in October. Economists expect the fall was caused by the “base effect” of lower energy prices compared to the period a year ago.
“Energy prices were probably the only source of downward pressure on inflation, mainly due to a base effect,” said Marco Valli, chief economist at UniCredit.
Carsten Brzeski, head of macro research at ING, said eurozone inflation “may indeed come down slightly”, but added: “It is still extremely complicated to gauge the timing of the pass-through of gas market on consumer price inflation”.
ECB rate setters will be watching core inflation, excluding volatile energy and food prices, just as closely as the headline figure. Valli said the base number was likely to stagnate at 5%, which may not be enough for the ECB to pivot lower from its recent rate hikes of 0.75 percentage points. Martin Arnold
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