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Key events in global markets this week: Focus on US jobs report

While the December quarter national accounts and GDP numbers will dominate local markets this week, even that important data will take a backward seat to the February US jobs report on Friday.

Besides, there’s also interest rate decisions from the European Central Bank and the Bank of Canada while Fed chair, Jay Powell faces two committees of the US congress this week for his start of the year Q&A.

Chinese data on trade for January and February on Thursday and then inflation – consumer and producer – out on Saturday and at the end of the 2024 session of the National People’s Congress, the country’s rubber stamp parliament which sits once a year. That will announce official growth and inflation targets for 2024.

But all eyes will return to the US jobs report on Friday and the now familiar, ‘will it mean any change to the Fed’s interest rate stance?

After employers delivered a stunning burst of hiring to begin 2024, adding 353,000 jobs in January, economists and analysts started pushing back their estimates for when the Fed will start cutting rates, a forecast that was made more uncertain by the mixed US inflation data for January.

By the end of January, a March rate cut was off, a rate cut at the meeting at the end of April and the start of May became more problematic and the best bet was the Fed meeting in mid June.

US economists think around 190,000 jobs were created in February, while the jobless rate will remain steady at 3.7% and wages growth will slow after it was boosted by the cold weather in January which saw tens of thousands lower paid outdoors workers laid off temporarily (meaning proportionately more higher paid workers remained in their jobs).

US economists continue to wonder wth the succession of job cuts announced by techs, some industrials and media companies will start showing up in the official data.
Though layoffs remain at low levels, there has been an uptick in job cuts so far in 2024, mostly across technology and media.

Google parent company Alphabet, eBay, TikTok, Amazon, Snap, and Cisco Systems and the Los Angeles Times have all recently announced layoffs.

Outside of tech and media, UPS, Macy’s and Levi’s also recently cut jobs.

Friday also saw the first of the two major monthly surveys of activity in the US economy which showed manufacturing remains in the doldrums – in a deep contractionary phase in fact and worse than China’s sluggishness.

The survey showed US manufacturing industry shrank in February for a 16th straight month. Manufacturing has been one of the weakest-performing areas of an economy that is still doing OK, helped by a resilient job market and spending by consumers which have propped it up.

A separate report from the University of Michigan said sentiment among US consumers was weaker than economists expected. It slipped in February from January but held most of the gains seen in recent months.

The results of both surveys saw US Treasury yields ease with the yield on the 10-year T-Bond down sharply to end around 4.18% from 4.25% late Thursday and from 4.28% early Friday morning.

And even though there was a limited deal on funding last week, the US Congress (Especially the Republicans) needs to progress a spending package to pass a Continuing Resolution this week to extend spending authorisations to avoid a partial government shutdown from March 8.

Wednesday’s meeting of the Bank of Canada is expected to leave interest rates on hold at 5% and retain a neutral bias and a similar move is expected at the meeting of the European Central Bank a day later.

More soft growth Thursday in the trade data for China for January and February combined, while analysts think the country’s Consumer Price inflation rate for February may move from the negative to a small rise of 0.1% in Saturday’s release.

The National People’s Congress which begins today will likely announce a growth target for this year of “around 5%” but will be watched closely for more widely expected policy stimulus.

In Australia there’s quite a bit of data (See separate Australian economy story) on GDP for the three months to December, trade, building approvals and housing finance for January, and current account figures for the December quarter as well.