Is the US labor market cooling?

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Is the US labor market cooling?

Hiring in the United States is expected to have slowed in June after two months of unexpected increases that helped the Federal Reserve continue to raise interest rates this year.

The Labor Department is expected to report Friday that the United States added 200,000 jobs in June, according to economists polled by Bloomberg, up from 339,000 in May.

The unemployment rate is expected to be 3.6%, down from the current rate of 3.7%. Average hourly earnings growth is expected to be flat at 0.3% month-over-month.

The U.S. job market has been much more resilient this year than economists and analysts expected, hovering at pre-pandemic levels even as the Fed raised interest rates at a blistering pace. over the past 15 months.

The median estimate from the Bloomberg Survey of Economists has underestimated the overall employment figure every month for the past 14 months. The unemployment figure, however, began to rise slowly.

The June jobs data will be a crucial part of the Fed’s deliberations at its upcoming policymaking session in July. The Fed indicated at its June meeting that it was ready to raise interest rates two more times this year, with an increase coming as early as July. Investors in the futures market are currently placing an 84% chance on the Fed realizing this quarter point increase. Kate Duguid

Can the euro zone 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 this rut.

High inflation and rising borrowing costs have eroded the purchasing power of many European households over the past year, but there are signs that rising wages and falling energy prices have recently stimulated consumers.

This led to a monthly increase in retail sales in France, Spain and Germany in May, indicating a strong likelihood that the headline eurozone figure will return to growth for the first time since January, when this data were released on Friday.

There could also be more encouraging news for the struggling German manufacturing sector this week. Thursday’s industrial orders data is expected to show a partial rebound with monthly growth of 3% in May and Friday’s production numbers are expected to rise 1%.

However, business and household surveys point to a further downturn in activity and demand in June. Jrg Krmer, chief economist at German lender Commerzbank, is skeptical of the chances of a lasting rebound, predicting that the German and eurozone economies will contract again in the second half of the year. Martin Arnold

Where is the Chinese economy headed?

After a string of pessimistic data out of China, investors will look to next week’s manufacturing and services releases for clues about the health of the world’s second-largest economy.

Caixin Manufacturing’s Purchasing Managers’ Index, due out Monday, is expected to come in at exactly 50 according to a Bloomberg poll of economists, straddling the PMI threshold between expansion and contraction.

Meanwhile, the Caixin Services PMI on Wednesday is expected to show a reading of 56.2, down from 57.1 in May, according to another Bloomberg poll.

Expectations of flat manufacturing growth in June follow this week’s official reading of manufacturing, which came in at 49 and signaled a third consecutive month of contraction among major manufacturers widely run by the state covered by the government survey. Monday’s reading will reflect conditions at smaller, privately-owned factories employing most workers in the sector.

Apart from a short-lived rebound in manufacturing after zero-Covid measures were suspended in early December 2022, Chinese industry was limping along, said Robert Carnell, head of Asia-Pacific research at ING.

Carnell said the most recent underperformance of the official manufacturing PMI was hardly a surprise and the slowdown in non-manufacturing activity reported on Friday confirmed that much of the growth in services this year has been driven by pent-up consumer demand. previously limited by China’s zero-Covid policies.

But he warned that there is only so long it can last. Hudson Locket

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