US employment is expected to soften along with rising wages

NEW YORK: US employers probably eased their hiring as wage growth moderated in June, another favorable development for Jerome Powell and his Federal Reserve (Fed) colleagues as they seek more confirmation that inflation is slowing.

Payrolls in the world’s largest economy are expected to have risen by about 190,000, according to a Bloomberg survey of economists ahead of Friday’s report.

That’s down from May’s surprisingly strong gain of 272,000. The unemployment rate has probably been held at 4%.

Average hourly earnings are forecast to have risen 3.9% from June last year, the smallest annual advance in three years.

The latest data, including falling job vacancies and higher weekly jobless claims, underscores demand for cooler, but also more resilient, jobs.

Having more workers available to choose from is helping companies pull back from the large wage increases that had been a source of inflationary pressures in recent years.

The closely watched jobs report is due a few days after today’s panel in Portugal that includes Fed Chairman Powell.

Investors will monitor his comments for clues on how soon the US central bank might start cutting interest rates.

Christine Lagarde, Powell’s eurozone counterpart, will also be on the panel at the European Central Bank’s annual forum in Sintra.

Meanwhile, the US labor market remains healthy, allowing consumer spending and the broader economy to continue growing despite higher borrowing costs.

Another key report for the holiday-shortened week ahead in the United States is expected to show a further decline in job openings, suggesting companies are having more success filling positions.

Openings for May are forecast to have fallen below eight million for the first time since the start of 2021.

“We expected to see growing signs that monetary policy, with its long lags, was affecting the economy,” Bloomberg Economics said.

“Next week’s data should provide more evidence.

“In Canada, June’s labor force survey will provide insight into a labor market that has failed to keep pace with explosive population growth and yet has racked up above-average wage gains.

“We will also look at the country’s international trade balance.”

Elsewhere, the second half of 2024 will kick off with a busy week.

Chinese business survey data and eurozone inflation are among the highlights, and elections in France and the United Kingdom will also focus investors.

In Asia, this week is a big week for purchasing managers’ indices (PMIs).

China’s official PMI showed factory activity contracted for a second straight month in June, signaling weakness in an area where Beijing is betting to boost the economy.

Caixin manufacturing PMI for the country may be lower.

Other Caixin PMIs are released later in the week, along with PMIs for Indonesia, South Korea, Myanmar, the Philippines, Malaysia, Thailand, Taiwan, Vietnam and Singapore.

In other data, the Bank of Japan’s (BoJ) Tankan survey is expected to show that business sentiment remained broadly stable in the second quarter, with the gauge for large service sector firms easing from a peak of three decades in the previous period.

Forecasts for capital expenditure for this financial year are expected to increase in the double digits.

Later in the week, Japan’s household spending data could show spending peaking in May, a result that would keep the BoJ on track for a rate hike as early as July.

Trade data is due in Australia and South Korea, while inflation reports are scheduled for South Korea, Indonesia, Pakistan, Thailand, Taiwan and the Philippines.

Among central banks, minutes from the Reserve Bank of Australia’s June meeting will get a lot of attention today after Governor Michele Bullock said the board considered a rate hike at that meeting.

In Europe, the Middle East and Africa, politics will dominate the region. Crucial elections in the UK and France are set to herald new governments and potentially change the tone for economic policy in each country. – Bloomberg