U.S. Labor Powers On as Price Gauge Hits 40-Year High: Eco Week

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(Bloomberg) — U.S. jobs and wages probably kept growing robustly in March and a key inflation measure may have reached a new 40-year high, reports that could push the Federal Reserve toward removing monetary stimulus even faster. 

Employers probably added close to a half million jobs and average hourly earnings advanced 5.5% from a year earlier, according to the median projections in a Bloomberg survey ahead of government data Friday. The unemployment rate is seen falling to 3.7%.

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The figures will help policy makers determine whether larger interest-rate increases are warranted as the Fed strives to rein in soaring inflation.

A day earlier, another report on February income and spending is forecast to show that the personal consumption expenditures price index accelerated to a 6.4% annual advance. That’s more than triple the Fed’s inflation goal.

Friday’s release will be the final monthly jobs report before the U.S. central bank’s next meeting in early May, although officials will also get inflation data for March that will reflect the impact of Russia’s war on Ukraine.  

What Bloomberg Economics Says:

“We expect that March jobs and inflation data to further harden the resolve of Fed hawks — and pull in those who were still skeptical — of the need for a 50bps hike at the May meeting.”

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–Anna Wong, Yelena Shulyatyeva, Andrew Husby and Eliza Winger, economists. For full analysis, click here

The U.S. data calendar is busy in the coming week and will also include reports on job openings, consumer confidence, and a closely watched manufacturing survey. 

Regional Fed presidents Patrick Harker, Raphael Bostic and Thomas Barkin are slated to speak at separate events.

Elsewhere, Chinese factory activity, another surge in euro-zone inflation, and likely rate hikes by central banks from Eastern Europe to South America will draw the focus of investors. Colombia in particular may see its biggest increase in borrowing costs of the current century. 

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

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Europe, Middle East, Africa

Fresh from the political controversy of his spring budget statement, Chancellor of the Exchequer Rishi Sunak will testify to lawmakers on Monday in a session likely to focus on whether he could have done more to alleviate the U.K.’s cost-of-living crisis. 

Bank of England Governor Andrew Bailey, whose institution is also at the front line of bringing surging inflation under control, is due to speak the same day. 

Consumer prices may prove a dominant theme across the euro area too. March inflation data from the region’s big four economies will be released on Wednesday and Thursday, before statistics for the whole currency zone arrive at the end of the week. All are likely to show  multi-decade highs as energy costs surge in the wake of the war in Ukraine. 

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While the median forecast for the euro area is 6.7% — a new record in the history of the single currency — several economists predict even faster inflation. The highest estimate is for an outcome of 7.7%. 

Meanwhile, weekly inflation data from Russia on Wednesday will give the latest indication of the costs consumers there are incurring for sanctions, as panic-buying exacerbates shortages. 

Elsewhere in Eastern Europe, decisions are scheduled from the Czech and Hungarian central banks. In Prague on Thursday, officials may raise interest rates again to tackle the fastest inflation in nearly a quarter century. 

Central-bank meetings will take the limelight across Africa too. Kenyan policy makers will likely keep rates unchanged for a 13th straight meeting on Tuesday as they assess the impact of a lower shilling. The next day in Mozambique, officials may also keep borrowing costs on hold. 

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On Thursday it’s Angola’s turn. The central bank there is also expected to keep rates unchanged as subsidies and a rally in the kwanza, the world’s best-performing currency against the dollar this year, help rein in inflation.

For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Brazil’s central bank gets the week rolling with its weekly survey of analysts’ expectations, followed by Mexico’s publication of February trade figures, which many economists see rebounding from a dreadful January.

In Argentina, fourth-quarter output slowed more than expected, and gathering headwinds suggest January’s GDP-proxy reading due on Tuesday may show a monthly contraction.

Next up, Mexico reports unemployment and budget data, while Chile reels off six separate economic releases, including its GDP-proxy report for February.

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Closing the week, Peru reports March inflation for its capital, Lima, while Colombia’s central bank is widely expected to raise its key rate by a whopping 150 basis points to 5.5%, which would be its biggest hike since 1998.

Over the last three days of the week, Brazil reports its broadest measure of inflation, total loans, unemployment, budget and trade data, capped off by industrial output.

Hours later, Chile’s central bank winds up its second meeting of the year. Surging inflation has many analysts looking for a second-straight 150 basis point hike, pushing the key rate to 7%. Traders surveyed see a bigger increase, of 200 basis points.

For more, read Bloomberg Economics’ full Week Ahead for Latin America

Asia

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Australia’s government unveils its latest budget on Tuesday ahead of an election that must be held by May 21, with polls showing Prime Minister Scott Morrison needing to pull something out of his hat if he’s to secure another come-from-behind win. 

Japan’s Prime Minister Fumio Kishida is facing calls for additional measures to ease the pain of soaring energy prices and to support an economy seen shrinking this quarter. 

Japanese jobs, factory output and retail sales figures will give an indication of how severe the downturn is looking. The Bank of Japan will release its Tankan business survey, showing the mood among companies as the war in Ukraine enters its second month. 

South Korean export and import numbers for March, due on Friday, will provide the latest take on the war’s impact on global commerce and Seoul’s trade balance. 

China’s PMI report will be closely watched on Thursday for the impact of lockdowns on key manufacturing hubs to contain Covid-19 outbreaks. Manufacturing reports from across the region follow on Friday.

For more, read Bloomberg Economics’ full Week Ahead for Asia

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