US Job Market Slows: A Win for the Fed


Last updated: July 1, 2024
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Courtesy of www.bloomberg.com

US hiring likely eased in June, while wage growth softened, signaling a positive turn for Federal Reserve Chair Jerome Powell and his team, eager for signs that inflation is cooling.

Economists surveyed by Bloomberg predict payrolls rose by about 190,000, a drop from May’s unexpected 272,000 surge. The unemployment rate is expected to remain steady at 4%.

Average hourly earnings are projected to increase by 3.9% year-over-year, the smallest rise in three years, suggesting a tempering of inflationary pressures.

Recent data, including fewer job vacancies and rising weekly jobless claims, highlight a more balanced yet still resilient labor market. The signs point to a cooling economy, but one that remains fundamentally strong.

This jobs report comes just after a crucial panel discussion in Portugal, featuring Powell. Investors will be keenly watching for hints on when the Fed might start cutting interest rates.

Christine Lagarde, President of the European Central Bank, will also join the conversation at the annual Sintra forum. Powell’s insights on the trajectory of US monetary policy will be crucial as markets seek clarity on future rate adjustments.

Despite cooling, the US labor market remains robust, underpinning consumer spending and economic momentum even with higher borrowing costs.

This delicate balance of slower growth and sustained consumer activity is a testament to the underlying health of the US economy.

Another key report expected this week will likely show a continued decline in job openings, indicating companies are finding it easier to fill positions.

Projections suggest fewer than 8 million openings for the first time since early 2021, which could signal a shift in employer-employee dynamics.

Canada’s labor force survey for June will also provide critical insights, reflecting the country’s struggles to keep pace with rapid population growth and resulting wage pressures.

We’ll also see updates on Canada’s trade balance, offering a broader picture of the nation’s economic health.

Asia kicks off the second half of 2024 with a flurry of data. China’s official PMI indicated factory activity contracted for a second consecutive month in June, a sign of weakness in a sector Beijing hopes will drive economic growth.

The upcoming Caixin manufacturing PMI might dip further, adding to concerns about China’s industrial health.

Other Caixin PMIs and PMIs from across Asia, including Indonesia, South Korea, and Vietnam, will follow, painting a comprehensive picture of the region’s economic landscape.

In Japan, the Tankan survey is expected to show steady business sentiment, with slight dips in the large service sector. This stability in sentiment suggests that while challenges exist, the overall business environment remains positive.

Japan’s household spending data might indicate increased outlays, supporting a potential rate hike by the Bank of Japan soon. This increase in consumer spending could be a sign of growing confidence in the economy.

Australia and South Korea will release trade data, which will shed light on their economic interactions and dependencies.

Meanwhile, inflation reports are on the docket for several countries, including South Korea and Indonesia. These reports will provide crucial data on price stability and economic resilience.

Elections in the UK and France could reshape economic policies significantly. UK voters head to the polls Thursday, potentially ending the Conservative Party’s 14-year rule.

The pressing question for the UK is how large of a majority Labour leader Keir Starmer will command in Parliament. Such a shift in power could lead to substantial changes in economic policy and market dynamics.

France’s National Assembly elections begin Sunday, with results possibly affecting market sentiment.

Initial results indicating the level of support for Marine Le Pen’s far-right National Rally could prompt a significant market reaction, reflecting investor concerns about political stability and policy direction.

The ECB’s annual retreat in Sintra will see leaders, including Lagarde, discuss economic challenges. New inflation data from the eurozone is expected, possibly showing a slowdown in price growth.

The ECB and Sweden’s Riksbank will release minutes from their recent meetings, offering more insights into policy directions and the central banks’ strategic thinking.

Germany and France will publish industrial production data, crucial indicators of manufacturing strength in the region’s two largest economies.

Switzerland’s inflation report will reveal whether consumer-price growth remains below the central bank’s target, providing a benign backdrop for economic planning.

Latin America sees central bank surveys in Brazil and Mexico, Chile’s GDP-proxy data, and Peru’s inflation report for Lima.

Economic activity in Chile is on the rise, driven by a combination of factors including increased domestic demand and favorable trade conditions.

Meanwhile, Peru’s core inflation remains persistent, influencing central bank policies and shaping economic outlooks.

Colombia’s central bank will release minutes from its recent meeting, reflecting a rate cut decision amid easing inflation. The minutes will provide detailed insights into the bank’s decision-making process and future policy directions.

Brazil’s industrial data will highlight ongoing economic challenges, showcasing the struggles of a sector striving to regain its former glory. Argentina’s central bank survey will offer inflation insights, critical for understanding the economic landscape.

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About The Author

Co-Founder & Chief Editor
Jon Morgan, MBA, LLM, has over ten years of experience growing startups and currently serves as CEO and Editor-in-Chief of Venture Smarter. Educated at UC Davis and Harvard, he offers deeply informed guidance. Beyond work, he enjoys spending time with family, his poodle Sophie, and learning Spanish.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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