(Bloomberg) – U.S. employers likely slowed their hiring pace this month after delivering the biggest pay increases since the start of the year, consistent with a robust labor market that supports economic expansion. .
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Government data on Friday is expected to show payrolls in the world’s largest economy rose by about 190,000 people in October, continuing strong employment growth following strong progress over the past three months. Growth continues.
Hourly wages are expected to rise at the slowest annual pace in more than two years, partly reflecting higher labor force participation rates. Suppressing wage growth helps explain why Federal Reserve policymakers are expected to keep interest rates on hold again on Wednesday after two days of meetings.
Labor market resilience has helped sustain consumer spending and economic growth as inflationary pressures gradually ease. Another reason for the strong employment growth is that economists are becoming more optimistic about the outlook, as the likelihood of a recession has decreased since June.
Economists will also be watching Tuesday’s third-quarter employment cost report for signs of slowing wage growth. Labor costs are the biggest expense for employers, and if they accelerate, there is a risk that inflation will remain high. The government’s latest findings on productivity will provide an indication of how successful companies are in mitigating some of the rising costs.
A gradual easing of harsh working conditions could be reflected in another report next week. The number of job openings in September is expected to decrease from the previous month and reach the highest level since March 2021.
Bloomberg Economics says:
“Wage growth is a more accurate indicator of labor market conditions. Both the Fed-recommended employment cost index and average hourly wages (part of the non-farm employment report) have likely slowed in recent months. This should allow the Fed to cover an extended suspension of interest rates.However, if these indicators indicate that fundamental conditions in the labor market are rapidly deteriorating, policymakers should This will raise new concerns for the
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Wu, economists.Click here for complete analysis
This week’s busy calendar also includes our October survey of manufacturers and service providers.
In Canada, new jobs data for October will reveal whether the labor market continues to ease, while gross domestic product (GDP) data for August will be mostly low as higher interest rates squeeze household budgets and limit spending. No growth is expected.
Elsewhere, investors will be kept busy by Japan’s central bank’s decision to risk a policy change, expected interest rate holds in the UK and Norway, and possible rate cuts in Brazil and the Czech Republic. In the euro area, data could show economic growth stalling and inflation slowing.
Click here to find out what happened last week. Below is a summary of what will happen next in the global economy.
Asia
This weekend, a meeting of G7 trade ministers in Osaka, Japan, revealed that some countries are exploiting the commercial vulnerabilities of other countries to pursue policy objectives without identifying the culprits. criticized for being
EU Trade Commissioner Valdis Dombrovskis and Australian Trade Minister Don Farrell are scheduled to meet for a key round of free trade talks after the G7 meeting, with both sides saying they will not be able to agree on a potential deal if they do not reach an agreement now. It warns that it could be delayed by months or even years.
Meanwhile, China is hosting the Xiangshan Forum for the first time since 2019.
This week’s highlight is the Bank of Japan’s policy meeting, which concludes on Tuesday. Most economists expect no change, but data shows the yen has hovered around 150 yen to the dollar, long-term yields have continued to rise, and more recently, Tokyo’s inflation rate has unexpectedly accelerated. As a result, many people are sounding the alarm about the risks of policy adjustment.
Japan is scheduled to report October currency intervention data in the evening, along with a number of other data in the morning. Prime Minister Fumio Kishida is also expected to announce details of the latest economic measures on Thursday.
Reserve Bank of India Vice Governor T. Ravi Sankar will speak on Monday, followed by Governor Shaktikanta Das the next day.
Malaysia’s central bank will make its interest rate decision on Thursday, but PMI data for the entire region, including China, is expected to be released later this week.
Vietnam, Thailand, South Korea and Australia will also report trade statistics throughout this week, providing an update on global demand, while Indonesia and South Korea will also release inflation statistics.
Europe, Middle East, Africa
While the Fed’s decision garners attention, Europe will await the outcome of three central bank meetings closer to home on Thursday.
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Most notably, the Bank of England is expected to keep interest rates on hold for the second successive meeting, while leaving the door open for further rate hikes if necessary to curb inflation. Investors are likely to focus on the breakdown of votes within the nine-member Monetary Policy Committee, with a minority likely supporting further rate hikes.
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In Norway, policymakers led by central bank governor Ida Volden Bache are expected to keep borrowing costs unchanged for the first time since January, but reiterate plans to raise key interest rates by the final quarterly point in December. Probability is high.
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The Czech central bank faces a close call given lingering inflation risks, with a majority of economists predicting a quarter percentage point cut and the rest unchanged.
Turning to the eurozone, key data on Tuesday could show the economy stalled or contracted in the third quarter under the cumulative weight of interest rate hikes.
Just four of the 29 economists surveyed by Bloomberg predicted that the brief economic expansion seen in the three months ending in June would continue into the fall.
A contraction in Germany’s economy, which releases its gross domestic product report on Monday, is expected to weigh on the region, while France and Italy are expected to turn to expansion the following day.
Inflation data released on the same day could show a noticeable slowdown, providing some comfort for the European Central Bank. Headline inflation is expected to slow to 3.1%, much closer to the ECB’s 2% target than before.
Changing of the guard ceremonies in Rome and Frankfurt may be in the spotlight as Bank of Italy chief Ignazio Bisco steps down this week. He will be succeeded by ECB board member Fabio Panetta, who will be succeeded by Piero Cipollone, a senior official at the Italian central bank.
In Switzerland, the Swiss National Bank’s nine-month results will be released on Tuesday, with Governor Thomas Jordan scheduled to give a speech two days later. Inflation statistics are also expected to be released on Thursday.
South Africa’s Finance Minister Enoch Godongwana is expected to table a budget on Wednesday, and investors will be watching to see how the government’s finances will stabilize as revenue shortfalls and increased spending swell the budget deficit and debt. .
The next day, a conference on U.S. preferential trade access to Africa begins, with hopes of extending the deal, which is due to end in 2025.
Investors in Egypt will be watching Thursday to see whether the central bank will raise interest rates to combat record high inflation, or whether it will do so for a second consecutive meeting. The decision affects the Egyptian pound, which has been under pressure amid severe foreign exchange shortages.
latin america
In a major event in the region, Brazil’s central bank is set to implement its third consecutive 50 basis point rate cut, reducing the Selic rate to 12.25%.
Inflation expectations for 2023 are now back within the central bank’s target range, but remained above actual targets over the period under review.
Latin America’s three largest economies have released their unemployment rate reports for September. The labor market is tight in Brazil, it is tight in Colombia, and slack is increasing in Chile.
Mexico on Tuesday became the first of the region’s large economies to report third-quarter output figures. Analysts expect a slight slowdown both sequentially and year-on-year, from 0.8% and 3.6% in the three months to June.
Brazil’s manufacturing PMI for September suggests that the country’s industrial production statistics for the same month, to be released this week, will also fall into the red. Peru’s inflation rate likely slowed in September for the first time in nine months, to just under 5%.
In Colombia, the pace of disinflation has been too slow and inflation expectations are too high and sticky, so the fourth meeting will probably convince the Bank of the Republic to keep the key policy rate at 13.25%.
Most analysts expect the bank to begin slowly easing its record tightening cycle over a multi-year period from 2021 to 2023.
–With assistance from Laura Dillon Kane, Robert Jameson, Piotr Skolimovsky, Monique Vanek, Paul Wallace, Ott Ummeras, and Yuko Takeo.
(Latest information with G-7 trade ministers in Asia section)
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