Diary: US Job Data Overshadows All Else

By Glenn Dyer | More Articles by Glenn Dyer

US jobs figures for April dominates the global data on economic and business this week, but there are also some important central bank meetings (Australia and the UK in particular) and Chinese trade figures for April at week’s end, plus global surveys of manufacturing and service sector activity.

Strong hiring is forecast in Friday’s US employment report, with the consensus for a 900,000 plus boost to new jobs for the second month in a row after March’s 913,000 rise.

Some economists claim the figure could top the million jobs mark because of the way the vaccination campaign and confidence continues to rise across the US.

Economists are looking at possible revisions for the march figure after similar upgrades for January and February a month ago.

The unemployment rate is also forecast to edge lower to 5.8% from 6.0%.

But economists remind us that while 14 million jobs had been regained over the past year, the total payroll count in March was still 8.4 million lower than its pre-COVID peak, highlighting how the labour market recovery has much further to go despite the recovery in the economy as a whole, as we saw with last week’s GDP estimate.

The AMP’s Dr Shane Oliver says the US is probably stronger than the report showed.

He said that while March quarter GDP rose at an annual rate of 6.4%, trade and inventories detracted -2.5 percentage points from growth.

Adding that back into the data, gross national spending rose a strong 9.9%.

“US GDP is now just 0.9% below its pre-coronavirus high and growth is likely to remain strong this quarter as stimulus checks are partly spent and vaccine rollout facilitates further reopening.”

“Consistent with this consumer confidence rose strongly in April, home prices are rising strongly, pending home sales rose in April and core capital goods orders are at historically high levels,” Dr Oliver wrote at the weekend.

The central bank action includes policy meetings in the UK, Australia, Thailand, Norway, Brazil, Malaysia, Turkey and the Czech Republic, as well as the minutes from the March BOJ gathering.

All meetings are being closely watched after the Bank of Canada decided last week to start winding down its stimulus spending amid signs of recovery and higher prices in the economy.

That’s happening elsewhere but none of the central banks (the Fed last week especially) seem as concerned as the Canadians, who have a reputation of jumping at shadows when it comes to tightening monetary policy.

The worldwide surveys of manufacturing and services starts today when the April reports on the former released in Japan, Australia and then elsewhere.

Further COVID-19 waves remain a concern and continue to be a threat to the outlook, especially in parts of Asia and Europe (Brazil and India in particular).

China’s official survey for April was still expansionary, but the pace slowed sharply from March, confirming other data suggesting a slight cooling.

Elsewhere recent surveys have highlighted how economic activity is showing greater resilience to the virus led by the US (the US jobs market will confirm that again on Friday).

This rising optimism about the outlook is fuelling spending and investment, as well as faster jobs growth, even in the EU and eurozone where unemployment continues to fall slowly, even though the zone moved into its second recession in a year in the three months to March.

Elsewhere in the Fed the US March quarter earnings season starts tapering (in quality of companies reporting) after last week’s fireworks from the likes of Apple, Alphabet and Amazon (see separate story).

More strong US economic data was released on Friday, continuing a trend that’s lifted stocks all month. March spending jumped a better-than-expected 4.2%, while personal incomes surged by a massive 21.1% thanks to the latest fiscal stimulus.

Core prices (so-called PCE inflation) rose 0.36% in March to be up 1.8% over the year, up from 1.4% in February. April and May is when the core rate is expected to bounce well past 2%.

After last week’s meeting, there are plenty of Fed members speaking in the US, led by chair Jay Powell. After his media conference comments last week, he is not expected to provide any new views when he participates in a National Community Reinvestment Coalition conference Monday afternoon.

Dallas Fed head Robert Kaplan speaks Tuesday (he wants the Fed to start talking about tapering its spending) and Thursday, and New York Fed President John Williams and Cleveland Fed President Loretta Mester are also speaking in the coming week.

This week sees the latest US initial jobless claims released on Thursday with another improvement expected. April new-vehicle sales should reflect continued strength, although there’s a shortage of vehicles because of the computer chip supply problem. Other data will include construction spending, factory orders and wholesale trade.

In Europe, the UK and Eurozone surveys of manufacturing and services will be released, starting tonight. The Bank of England’s Monetary Policy Committee meeting happens this Thursday.

The Bank upgraded its growth forecasts last month but no change in policy is expected.

That’s a similar story for the Reserve Bank of Australia which will sit tight and not change policy. The second Statement On Monetary Policy is released on Friday (See separate story).

The interim reports from Westpac, NAB and ANZ report this week, while its Macquarie Group’s final on Friday.

China is on holidays for most of the week. April trade data will be released on Friday.

First quarter GDP figures will also be released for Hong Kong and Indonesia.


Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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