Friday’s nonfarm payrolls figures for June will be the standout of a data-packed year in the United States, which will likely be shortened by July 4 celebrations.
Analysts polled by Reuters expect an additional 180,000 unfilled jobs to be created in June and forecast the unemployment rate will remain steady at 4 percent, its highest level since February 2022.
Strong headline earnings of 272,000 in May – far exceeding expectations – prompted some bemoaning the fitness of the economy, although economists pointed to nuances in the following financial data that suggested slowing growth.
“Americans still find it easy to find jobs,” said Yelena Shulyatyeva, senior U.S. economist at BNP Paribas, adding that expansion in health care, vacation and hospitality, as well as local and environmental government jobs, were expected to back up the headline numbers. needed.
The group’s fall short of expectations could have investors worried that the United States economy is losing its grip. Data in June showed that ongoing claims for unemployment benefits had reached 1.84 million, its highest level since November 2021 – showing that prospective workers are feeling thirsty to get a job, even if The people working were confident about their abilities.
Buyers may also be aware of its alerts for moderate hourly profit growth and inflation. May data showed a persistent decline in core private consumption expenditures – the federal government’s favorite inflation gauge – supported those expecting an interest rate cut in the coming months. Profit growth for June is projected to fall to 3.9 percent year-on-year, at an unprecedented low following the pandemic.
“Historically, AHE growth around 3 percent has been more consistent with 2 percent growth of (personal consumption) inflation,” Shulyatyeva said. jennifer hughes
How will sterling react to the Labor landslide?
Markets have ignored the ups and downs of the United Kingdom’s general election campaign in recent weeks, with the opposition Labor Party widely expected to go into government with a majority of seats in Parliament after Thursday’s elections.
Sterling has weakened 0.6 percent against the dollar since Prime Minister Rishi Sunak’s surprise announcement of a July 4 election in May. The decline has generally been driven by a powerful dollar, which has strengthened 1 percent against a basket of six currencies over the same period.
In a year where UK government bond prices have suffered from financial data expectations that England’s treasury will start lowering interest rates, they have remained fairly stable compared to their French opposite numbers during the parliamentary elections there.
Buyers say an extremely large Labor majority could provide some backup for sterling and UK debt if it is helping to reassure markets that an unelected government would usher in a long period of stability and recovery in UK politics. Will make planning permission more simple. Legislation that can help encourage expansion.
“Relatively (to France), the UK (election) is being treated as a non-event,” said Peter Goves, head of advanced markets fee strategy at MFS World. He further said that, “at the margins”, a Labor landslide would be Sterling’s backup as it should provide “a degree of stability in the UK that has arguably been lacking”.
Labor leads the ruling Conservatives by almost 20 per cent of the issues within the FT’s aggregation of recent nationwide vote casting target surveys. If the polls are broadly correct, Labor could win around 450 of the 650 House of Commons seats. Mary McDougall
Will EU summer fun fuel inflation?
The start of the summer tourism season is sending prices rising for many services and products from package holidays to hotels, raising the risk of a decline in eurozone inflation expected by many analysts.
Unedited inflation data for the bloc, to be published on Tuesday, will show how much prices of services and products are being raised and whether this is being offset by falls in energy and food prices.
Economists polled by Reuters forecast general eurozone inflation would fall to 2.5 percent in June from 2.6 percent in May.
Data released Friday in France, Spain and Italy suggest early signs that downward pressure from a softening in electricity and food inflation are relatively stronger than from increases in prices of sticky services and products.
Inflation decreased relatively in France and Spain, but increased relatively in Italy. After eliminating electricity and food, core inflation was either flat or declined relatively in all three countries. George Moran, an economist at Nomura, noted: “The evidence on core inflation suggests little upside risk.”
The data should nevertheless express some sympathy for EU central storage, which recently cut futures interest rates for the first time in five years amid concerns about the stickiness of prices for services and products.
“Overall, these releases will not worry ECB officials too much, but will strengthen their resolve to remain vigilant by preventing deflation in services,” said Franziska Palmas at Capital Economics.
He predicted the ECB would likely keep interest rates steady again at its upcoming meeting in July, but would then cut the overall interest rate twice by the end of the year. martin arnold