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Economic preview: Payrolls Friday puts focus on US

13:21, 26 November 2021

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Jobs data could provide the Fed with more clues – Photo: Shutterstock

The US labour market takes centre stage on next week’s economic data calendar, with Friday’s non-farm payrolls report on jobs creation and unemployment in November.

The eurozone’s data points during the week also include unemployment on Thursday, as well as consumer price inflation on Tuesday.

Updated purchasing manager surveys on the manufacturing sector on Wednesday and services on Friday are published in the UK, US and eurozone.

While providing central banks with more fodder for analysing policy settings, the market fall-out from this week’s discovery of a new coronavirus variant will switch a great deal of policymaker attention from interest rates to thoughts of the possible need for further stimulus, should the variant prompt the reimposition of public restrictions.

US non-farm payrolls

Monday will wrap up the Black Friday retail sales bonanza and attention will turn to next Friday’s non-farm payrolls, the monthly examination of the US labour market.

October’s payrolls report showed 531,000 new jobs were created, an improvement from the late summer months, as the headwind from the surge in Covid-19 infections over that period subsided.

It offered more evidence that economic activity was regaining momentum early in the fourth quarter; however, the labour force was still down three million from its pre-pandemic level.

“Given the ample evidence that demand for labour remains robust, with record numbers of job openings and upward pressure on wages, we expect another solid employment report in November,” said HSBC US analyst Ryan Wang.

Consensus expectations predict a further 500,000 jobs will be added to the labour force in November, while HSBC foresees 550,000.

Meanwhile, the unemployment rate is expected to dip to 4.5% from 4.6% in October.

Eurozone CPI inflation

The annual headline rate of inflation in the eurozone, as measured by the consumer price index, hit 4.1% in October, from 3.4% in the previous month – the highest level since July 2008, as surging energy costs and continuing supply constraints pushed producer prices higher.

October’s data showed energy price inflation soared to an annual rate of 23.7%, from 17.6% in the prior month, as oil prices hit multi-year highs – Brent crude peaked at $86.70 a barrel during the month – while natural gas hit a record high.

While energy prices tempered somewhat in November, purchasing manager surveys showed that input prices continued to rise at record levels, and some of these costs will have found their way into selling prices to customers and consumers.

Thus, HSBC analysts expect headline consumer price inflation (CPI) to rise to an annual rate of 4.5%, above the consensus 4.3%.

Best of the rest

Purchasing manager surveys have broadly presented a picture of robust growth in business activity in the major economies, albeit slowing from the peak re-opening months seen in the spring and early summer.

This week’s reports into manufacturing in the US, UK and eurozone on Wednesday and services on Friday are expected to continue this theme as supply bottlenecks and rising costs remain the biggest headwinds to output.

Economic highlights 29 November to 3 December

Monday

  • UK – consumer credit October
  • UK – net lending to individuals October
  • UK – mortgage approvals October
  • Eurozone – business climate/economic sentiment/consumer confidence November
  • US – Dallas Fed manufacturing index November

Tuesday

  • Japan – construction orders October
  • Germany – unemployment November
  • Eurozone – inflation CPI November
  • US – house price index September
  • US – Chicago PMI November

Wednesday

  • UK – BRC shop price index October
  • Australia – third-quarter GDP
  • UK – Nationwide house prices November
  • Germany – retail sales October
  • UK – Markit manufacturing PMI November
  • Eurozone – Markit manufacturing PMI November
  • US – Markit manufacturing PMI November
  • US – ISM manufacturing PMI November

Thursday

  • Australia – trade balance October
  • Eurozone – unemployment October
  • US – initial jobless claims

Friday

  • UK – Markit services PMI November
  • Eurozone – Markit services PMI November
  • US – Markit services PMI November
  • US – non-farm payrolls employment report November
  • US – ISM services PMI November

Read more: Fourth Covid-19 wave hits German Ifo business sentiment

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