NEW YORK: U.S. employers probably added more than half a million workers for a second straight month in November, pushing the labor market closer to a full recovery despite swirling inflation worries and persistent Covid-19 infections.
Payrolls are expected to rise by 550,000 and the unemployment rate to edge down to 4.5%, according to the median estimates of economists ahead of Labor Department data due Friday in Washington.
A strong jobs report, coupled with another monthly jump in consumer prices in Labor Department data out Dec. 10, could seal a decision at the Federal Reserve’s mid-December meeting to accelerate the tapering of bond purchases. But a new pandemic wave might still scupper that, a fear that caused market jitters on Friday.
Fed Chair Jerome Powell, fresh from being picked for a second term by President Joe Biden, is likely to face questions Tuesday about tapering, interest rates and inflation when he appears before the Senate Banking Committee for a regular hearing on the Cares Act, the March 2020 pandemic aid package. Treasury Secretary Janet Yellen will testify alongside Powell, and the House Financial Services Committee has a similar panel scheduled for Wednesday.
The Fed’s Beige Book survey, out Wednesday, will also shed light on the economic situation across the country. Other key U.S. data during the week include pending home sales, consumer confidence, and Institute for Supply Management indexes of manufacturing and services.
What Bloomberg Economics Says:
"A strong jobs report as we expect, together an with elevated CPI reading for November -- a highly likely outcome given what we know about energy, housing prices and base effects -- will cement policy makers’ decision.”
--Anna Wong, Andrew Husby and Eliza Winger.
Elsewhere, the fastest inflation since the euro was created and easing price pressures in Brazil may feature among economic reports due.
China’s official PMI reports on Tuesday will give the latest pulse check on the world’s second-largest economy, with economists’ forecasts anticipating an improvement for manufacturers as power shortages abated.
Japan gets a raft of data on production, unemployment and retail sales that will show how the economy was faring at the beginning of this quarter, days after Prime Minister Fumio Kishida launched a record fiscal stimulus package. Capital spending figures will indicate how business sentiment has been holding up.
South Korean export numbers should take the latest pulse of world trade, while inflation figures the following day will show if prices are continuing to heat up.
India posts gross domestic product data for the July-to-September quarter, with the rebound’s pace set to moderate from the prior three months, while GDP data for the third quarter will show how badly Australia’s economy suffered during its lengthy lockdowns.
Any acceleration in euro-area consumer-price data on Tuesday will mean the region’s enduring the fastest inflation since the creation of the single currency. That will heap further scrutiny on the European Central Bank, whose officials insist the surge is largely transitory as they approach a crucial decision on the future of stimulus.
In Germany, the region’s biggest economy, the cost-of-living squeeze is even more intense. The median prediction of economists is for an inflation rate of 5.5% in November, though the Bundesbank reckons the outcome may be closer to 6%.
Inflation numbers from elsewhere in Europe will also show significant jumps. Spain’s rate due on Monday is seen at 5.6%, according to the median estimate. Poland’s may be even higher at 7.3%.
Other highlights in western Europe include a speech by Bank of England policy maker Catherine Mann on Tuesday, multiple appearances by Swedish Riksbank officials, and the latest global economic outlook from the OECD in Paris on Wednesday.
In Turkey, foreign trade data on Monday and inflation figures on Friday could move the lira, which just plummeted to its longest losing streak in two decades. President Recep Tayyip Erdogan has defended monetary policy that economists say will cause inflation to spike higher than 20%. The turmoil has even led some banks to stop external forecasts.
In Africa on Monday, Kenya’s central bank is expected to leave its key interest rate unchanged for an 11th straight meeting to spur the economy’s recovery, as demand remains muted even after the government eased Covid-19 lockdown restrictions.
Data on Tuesday will likely show that South Africa’s unemployment rate is still the highest on a global list of 82 countries monitored by Bloomberg. It’s projected to remain above 33% in the third quarter, following deadly riots in July and a security breach at the state-owned port operator that hobbled trade.
Also Tuesday, Angola’s central bank will probably hold interest rates steady to give some time for a 450 basis-point-hike in July and new measures by the government aimed at curbing price growth to take effect.
Look for November’s reading of Brazil’s broadest inflation measure, out Monday, to slow for a sixth straight month as electricity and food prices ease.
Mexico’s October unemployment data may reflect a pick-up in activity as Covid case counts and lockdowns ease. In Chile, currently Latin America’s hottest economy, the unemployment rate likely extended a six-month decline. Brazil and Colombia will also report October unemployment.
Mexican remittances are running at record highs and have been above $4 billion per month since February. Transfers from the U.S. represent 95% of all remittances received in Mexico and two states -- California and Texas -- account for half of the total.
Banxico’s quarterly inflation report due Wednesday promises a trove of fresh forecasts and analysis. Also, look for Chile’s economic activity index to post double-digit growth for a seventh month.
Given a litany of headwinds facing Brazil’s economy, analysts have been marking down their 2021 and 2022 GDP forecasts, but third-quarter output data due Thursday may show at least marginal growth after shrinking 0.1% in the April-to-June period.
Look for Brazil’s October industrial production figures out Friday to disappoint as supply shortages and rapidly rising interest rates bite. - Bloomberg