U.S. Jobs Report and Powell’s Testimony Take Center Stage

(Bloomberg) — U.S. job growth likely moderated last month after a blistering pace in January, while the jobless rate likely remained at a 53-year low, illustrating a labor market that has proven largely unresponsive to massive interest rate hikes by the Federal Reserve.

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The report will follow testimony from Fed Chairman Jerome Powell on Tuesday and Wednesday as he delivers a semi-annual report on monetary policy to lawmakers. His comments could shed light on whether investors agree with the central bank’s view of how high it will need to raise rates to bring inflation down.

Payrolls rose by 215,000 in February, according to the median forecast from a Bloomberg survey. To start the year, US employers added more than half a million workers and the unemployment rate fell to 3.4%, results that dashed expectations of a short-term pause in the campaign Fed tightening.

Friday’s jobs report will be the last before the Fed meets on March 21-22 to consider another 25 basis point rate hike or to potentially be tougher in light of recent data showing inflation. tenacious. Officials will also have February’s consumer price index and retail sales data on hand before they meet.

“If the data shows that the reacceleration at the start of the year was short-lived, the Fed’s narrative would become much easier,” Bank of America Corp. economists, led by Michael Gapen, said in a report. . “A little bit of bad news would be good news for the Fed.”

Resilient labor demand supported wage growth, which supported consumer spending and increased costs for employers. This risks keeping inflation higher for longer and helps explain why swap markets are now pricing in a maximum policy rate of 5.5% in September. The reference rate is currently in a range of 4.5% to 4.75%.

What Bloomberg Economics says:

“But our analysis suggests that many of the high-profile layoffs that have been announced – in technology, for example – don’t translate into job losses until about two months later. If so, we should expect to see initial jobless claims climb in March.

The March jobs reports – which won’t be released until after the next FOMC meeting – will likely show clearer signs that the labor market is weakening. Unfortunately, the Fed cannot wait for the fog to clear to make policy decisions.

—Anna Wong, Stuart Paul and Eliza Winger, economists. For a full analysis, click here

Lawmakers will likely ask Powell if a half-percentage-point move is being considered. The Fed raised rates by a quarter of a point on February 1, following a half-point hike in December after four straight moves of 75 basis points.

Elsewhere, Canada’s central bank could halt rate hikes while Australia’s are likely to rise again, and the Bank of Japan’s decision will mark the end of an era.

Click here to see what happened last week and below is our summary of what is happening in the global economy.


In Canada, Governor Tiff Macklem is expected to become the first Group of Seven central banker to lift the monetary brake on Wednesday.

The Bank of Canada is expected to hold rates at 4.5% in its first decision since authorities declared a conditional break in January. Macklem said it would take an “accumulation of evidence” that the economy was not developing as expected for policymakers to come off the sidelines, and so far that has not materialized.

Inflation in Canada slowed to 5.9% at the start of the year, after peaking at 8.1%, and output stagnated in the fourth quarter. The labor market, however, remains tight, with a fresh batch of jobs data expected on Friday after two back-to-back blowout reports.


China has set a modest economic growth target of around 5% for the year, with the country’s top leaders avoiding any major stimulus to spur a recovery still weighed down by weak business confidence and an uncertain property market.

Recent data has shown that the economic recovery is gaining strength, and trade and inflation figures are due later this week.

Haruhiko Kuroda makes his final policy decision as Bank of Japan governor on Friday as a momentous decade-long tenure of unprecedented stimulus draws to a close.

Although he has one last chance to surprise the markets with a move that could help his likely successor Kazuo Ueda, the consensus is that Kuroda will end with barely a groan as a pass that started with a bazooka from Bond buying ends with a simple stand-tap.

The week begins with inflation figures from South Korea that will test how seriously Bank of Korea Governor Rhee Chang-yong must consider the possibility of returning to interest rate hikes. interest after interrupting the tightening cycle last month.

The Reserve Bank of Australia meets on Tuesday and is expected to go ahead with another quarter percent rate hike, even after recent data showed slower-than-expected growth and a cooling of the economy. inflation. Under pressure Governor Philip Lowe will have the opportunity to explain the decision the following day amid growing anxiety over Australia’s cost of living crisis.

Europe, Middle East, Africa

After a week of core eurozone inflation hitting a new record high, the coming days offer the last chance for policymakers to comment ahead of a pre-decision blackout period ahead of their March 16 meeting. Investors are betting that the European Central Bank’s deposit rate will rise to as much as 4% in the coming months.

Speaking in an interview published on the ECB’s website on Sunday, President Christine Lagarde said a half-point rate hike this month was “very, very likely”.

Lagarde is expected to speak again this week, as are chief economist Philip Lane and executive board member Fabio Panetta.

It’s a quieter week than usual for Eurozone data. German factory orders and industrial production on Tuesday and Wednesday respectively will be among the highlights.

In the UK, Friday’s figures will reveal whether the economy has started 2023 with an expansion, keeping a widely forecast recession at bay for longer. Gross domestic product likely rose 0.1% in January from the previous month, according to economists’ median forecast.

Consumer price data elsewhere in Europe will attract investors’ attention. From Monday, Swiss data will likely show slower inflation in February, with economists anticipating a 3% result. Price growth in the Czech Republic and Norway, expected on Friday, may also have weakened.

Hungary, which saw the fastest inflation in the European Union in January, likely suffered a similar result above 25% last month. This release arrives on Wednesday.

On the same day, Polish policymakers are likely to keep their rate at 6.75%, while on Thursday, their Serbian counterparts could raise borrowing costs again.

In Sweden, the monthly GDP indicator for January may indicate whether the largest Nordic economy started the year with another contraction. With a recession looming and the housing market collapsing, investors could focus on speeches from officials including Riksbank Governor Erik Thedeen on Tuesday. Thedeen said on Saturday that tackling inflation remained the priority.

Further east, Russia reported auto sales on Monday, which are expected to remain down sharply as Western producers leave. Friday’s monthly inflation data will be watched for signs of increasing price pressures.

In South Africa, data on Tuesday will likely show the economy contracted in the fourth quarter as record power cuts stifled output and discouraged investment. In last month’s figures, mining and manufacturing output, which accounts for about a fifth of total GDP, fell in the December quarter.

Egyptian inflation expected on Thursday is expected to show further acceleration after food prices hit a record high and the effects of the latest currency devaluation were felt.

Thursday’s data is expected to show Saudi Arabia’s non-oil sector grew at the fastest pace in more than a year and helped the kingdom register the fastest overall growth among the world’s major economies in the end of last year.

Latin America

In Argentina, construction activity and industrial production in January could both extend downward trends, largely due to trade and currency controls hampering the import of materials.

After a surprise decision to keep the key rate unchanged in February at 7.75% after 18 consecutive hikes, Peru’s central bank is opposing it at this week’s policy meeting. Nationwide protests that have weighed on economic activity have also put pressure on inflation, which is currently near its June 2022 peak of 8.81%.

Closing out the week, the last of the region’s five major economies released February’s consumer price reports. With Chile, Mexico and Brazil all appearing to be on the downside of the inflation peak, many analysts expect above-target readings to unseat the trio through 2025.

A third month of slowdown in Chile could only reduce the headline rate to 12%, while early estimates for Mexico see it falling to around 7.7%, the first drop in three months and just 100 basis points below. from the top of the cycle.

And while Brazil’s central bank cut its headline reading by 600 basis points, inflation is now stuck at just below 6% – around where local analysts see it at the end of the year. .

–With assistance from Gregory L. White, Robert Jameson, Stephen Wicary, Malcolm Scott and Andrea Dudik.

(Updates with Chinese Congress in the Asia section, Lagarde in the EMEA section.)

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