NEW YORK – U.S. employers added over half a million workers in November for the second consecutive month, pushing the labor market closer towards a complete recovery despite persistent Covid-19 infections and inflation concerns.
According to economists’ median estimates, payrolls will rise by 550,000 while the unemployment rate will fall to 4.5%. This is according to Labor Department data due Friday in Washington.
Strong jobs reports, combined with another monthly rise in consumer prices in Labor Department data from Dec. 10, could secure a decision by the Federal Reserve at its mid-December meeting to accelerate the reduction of bond purchases. However, market jitters were caused by fears that a new pandemic could still derail that decision.
Fresh from being elected by President Joe Biden for a second term, Fed Chair Jerome Powell will likely face questions about tapering, interest rate and inflation Tuesday when he appears before Senate Banking Committee to answer regular hearings on the Cares Act (March 2020 pandemic assistance package). The House Financial Services Committee will host a similar panel on Wednesday, with Janet Yellen, Treasury Secretary, as Powell.
The Fed’s Beige Book survey on Wednesday will provide insight into the economic conditions in the country. The week will also include data on pending home sales, consumer confidence and Institute for Supply Management indexes for manufacturing and services.
Bloomberg Economics:
“A strong jobs report, as we expect, along with an elevated CPI reading November — which is highly probable given what we know regarding energy, housing prices, and base effects — will cement the policy makers’ decision.”
Anna Wong, Andrew Husby, and Eliza Winger
Other economic reports may include a report on Brazil’s easing of price pressures and the fastest inflation since euro creation.
Asia
China’s PMI report on Tuesday will provide the most recent pulse check on the second-largest economy in the world. Economists have forecasted an improvement in manufacturing as power shortages recede.
Japan receives a host of data on production, unemployment, and retail sales. This will allow them to see how the economy was doing at the start of the quarter. These data are available just days after Fumio Kirishida, Prime Minister, launched a record-breaking fiscal stimulus package. The capital spending data will show how the business sentiment has held up.
South Korean export figures should be taken into account when assessing world trade. Inflation figures for the next day will indicate if prices continue to rise.
India publishes gross domestic product data for July-to September quarter. The rebound’s pace is expected to slow from the previous three months. While GDP data for Australia’s third quarter will reveal how badly Australia’s economy suffered in its long lockdown.
Any acceleration in euro-area consumer price data Tuesday will signify that the region is experiencing the fastest inflation rate since the creation and adoption of the single currency. This will put more pressure on the European Central Bank. Officials insist that the surge is temporary as they prepare to make a critical decision about the future of stimulus.
The cost of living squeeze in Germany is more severe than elsewhere. Germany is the largest economy in the region. Economists predict an inflation rate of 5.5% for November. However, the Bundesbank believes it could be closer to 6.
Significant jumps will also be seen in inflation numbers from Europe. According to the median estimate, Spain’s inflation rate is expected to rise by 5.6% on Monday. The rate in Poland may be higher at 7.3%.
Other highlights include a Tuesday speech by Catherine Mann, a Bank of England policymaker, multiple appearances from Riksbank officials and Wednesday’s global economic outlook report by the OECD in Paris.
Turkey’s foreign trade data and inflation figures could affect the Turkish lira. These are both important for Turkey after it suffered its worst loss in 20 years. Turkey’s President Recep Tayyip Erdogan defended the monetary policy economists believe will cause inflation to rise above 20%. Some banks have stopped making external forecasts because of the turmoil.
On Monday, Kenya’s central banks will likely leave their key interest rate at the same level as last week. This is to help spur the recovery of the economy. Demand remains weak even after Covid-19 restrictions were lifted by the government.
On Tuesday, data will show that South Africa’s unemployment rates are still at the top of a global list 82 countries. This is according to Bloomberg. After deadly riots in July, and a security breach at a state-owned port operator that hampered trade, it is projected to stay above 33% for the third quarter.
Tuesday will also see Angola’s central banks keep interest rates stable to allow for a 450-basis-point hike in July and new government measures to curb price growth.
As electricity and food prices rise, you can expect November’s reading for Brazil’s broadest inflation measure to slow for the sixth consecutive month.
Mexico’s October unemployment data could reflect an increase in activity due to Covid case counts and the ease of lockdowns. The unemployment rate in Chile, Latin America’s most populous country, is likely to have extended its six-month-old decline. Colombia and Brazil will also report on October unemployment.
Remittances from Mexico are at an all-time high and have topped $4 billion per month every month since February. Transfers from the U.S. account for 95% of all remittances to Mexico, while two states, California and Texas, account for half.
The Wednesday, February quarterly inflation report by Banxico promises to be a treasure trove of new forecasts and analysis. For the seventh month, Chile’s economic activity index will show double-digit growth.
Analysts have been reducing their 2021 and 2022 forecasts for Brazil’s economy due to a host of headwinds. However, the third quarter output data due Thursday could show marginal growth, after shrinking 0.1% over the April-to June period.
As supply shortages and rapidly rising rates bite, Brazil’s October industrial production figures will disappoint. Bloomberg
