Will jobs data point to a soft landing for the US economy?
US job numbers for August are expected to come in lower than July’s, but remain in expansion territory – reflecting a 20th consecutive month of growth.
Economists predict Friday’s figures will show the US added 290,000 jobs in August, a 45 percent drop after July’s figure of 528,000 significantly surpassed estimates.
Jennifer Lee, a senior economist at the Bank of Montreal, said the August consensus reflects a turnaround for employers, who may still need more workers but have adjusted expectations in a tight job market where unemployment rates are at historic lows. BMO expects to create 250,000 jobs.
“Let’s say you were looking for 12 people to hire and you had a really hard time finding the right people,” Lee said. “You may be thinking, do I really need 12 more people to hire? Maybe we’ll make it with only six[hires]. . . and squeeze a little more out of the existing workforce.”
Strong worker demand, combined with a recent durable goods report that reflected a monthly rise in business investment, are indicators for Lee that the US economy is holding up even as the Federal Reserve raises interest rates to cool it.
Even if major retailers have lowered their full-year outlook, they have still reported strong sales indicating resilience in US consumer spending. Macy’s and Nordstrom have beaten analysts’ expectations for quarterly earnings in recent days, and Home Depot reported record high quarterly sales earlier in August.
Lee said she expects a “significant slowdown” in the US economy in the second half of 2022 and into 2023, but isn’t ready to call it a recession.
“If it’s a recession, it’s going to be the weirdest thing ever,” she said. Years Kerr
Have rising natural gas prices pushed inflation in the eurozone even further?
Euro-zone inflation data for August will be closely watched next week as investors question how much the European Central Bank will need to tighten monetary policy against a backdrop of rising energy costs.
Rising oil and natural gas prices, fueled by the Russian war in Ukraine, pushed inflation in the eurozone to 8.9 percent in July. Economists polled by Reuters expect that figure to hit 9 percent when the data is released Wednesday.
Jane Foley, head of FX strategy at Rabobank, said rising gas prices have led investors to have “really negative sentiment around the eurozone that has built up over the past few weeks”.
Contracts linked to the TTF, the European wholesale price for natural gas, reached a record high of more than € 343 per megawatt hour on Friday.
The ECB is expected to raise interest rates by at least 0.5 percentage point at its September meeting in a bid to tackle record inflation. But investors fear that higher borrowing costs could send the region into recession.
Germany’s central bank chief has already warned that inflation will not decline in 2023 and that record energy prices due to the slump in Russia’s demand would push inflation in the country above 10 percent in the autumn. Nikou Asgaric
Did UK mortgage loan approvals fall further in July?
Mortgage approvals in the UK are expected to have fallen further in July, continuing the downward trend of rising mortgage rates and historically high inflation.
Economists surveyed by Reuters expect the Bank of England to reveal that 61,750 mortgages were approved last month, down from 63,726 in June and from a peak of over 100,000 in November 2020.
Against the trend, Sandra Horsfield, an economist at Investec, expects a small increase [to 64,100] but added that “their trend is still downward – an image that should remain in place as long as interest rates rise sharply and the economic outlook and confidence deteriorate”.
In June, data from the Bank of England showed that interest rates on newly underwritten mortgages rose 20 basis points (0.2 percentage points) to 2.15 percent, the highest level since 2016, following six consecutive policy rate hikes by the BoE.
Market pricing implies that key interest rates will more than double to 4 percent from current levels of 1.75% early next year as energy and consumer prices continue to rise.
As a result, consultancy Oxford Economics predicts that house prices will contract on an annual basis from next year, compared to double-digit growth at the beginning of this year.
Sky-high house prices are likely to feel the pull of the rising cost of living in the fall, with the looming energy price ceiling hike to fuel inflation and the specter of higher interest rates to combat rising prices, driving up borrowing costs. said Myron Jobson, senior personal finance analyst at investment services firm Interactive Investor. Valentina Romei