Did US job growth slow in August?

Will jobs data signal a soft landing for the US economy?

U.S. jobs data for August is expected to be lower than July but remain in expansion territory, reflecting a 20th consecutive month of growth.

Economists predict Friday’s figures will show the United States added 290,000 jobs in August, marking a 45% drop after July’s figure of 528,000 far exceeded estimates.

Jennifer Lee, senior economist at Bank of Montreal, said the August consensus reflected a sea change for employers, who may still need more workers but have adjusted their expectations in a tight labor market where the unemployment rate is at historic lows. BMO expects 250,000 jobs to have been added.

“Let’s say you were looking for 12 people to hire and you had a really hard time finding the right people,” Lee said. “You might be thinking, do I really need 12 more people to hire? Maybe we can get by with just six[hires]. . . and draw more from the existing workforce.

Strong demand for workers, combined with a recent durable goods report that reflected a monthly rise in business investment, are indicators for Lee that the U.S. economy is holding up even as the Federal Reserve raises interest rates for the chill.

Even though major retailers slashed their forecasts for the full year, they still released strong sales numbers that speak to the resilience of consumer spending in the United States. Macy’s and Nordstrom have beaten analysts’ expectations for quarterly revenue in recent days, and Home Depot reported record quarterly sales earlier in August.

Lee said she expects a “significant slowdown” in the U.S. economy in the second half of 2022 and into 2023, but is not ready to call it a recession.

“If it’s a recession, it’s going to be the weirdest ever,” she said. Jaren Kerr

Has the surge in natural gas prices propelled euro zone inflation even higher?

Eurozone inflation data for August will come under scrutiny next week as investors ponder how much the European Central Bank will need to tighten monetary policy amid soaring oil costs. energy.

Escalating oil and natural gas prices, fueled by Russia’s war in Ukraine, pushed eurozone inflation to 8.9% in July. Economists polled by Reuters expect the figure to rise to 9% when the data is released on Wednesday.

Jane Foley, head of FX strategy at Rabobank, said rising gas prices caused investors to have “genuine negative sentiment around the euro zone that has built up over the last few weeks.”

Contracts linked to TTF, the wholesale price of natural gas in Europe, hit a record Friday above €343 per megawatt hour.

The ECB is expected to raise interest rates by at least 0.5 percentage point at its September meeting to combat record inflation. But investors fear higher borrowing costs could tip the region into recession.

Germany’s central bank chief has previously warned that inflation will not come down by 2023 and that record energy prices triggered by the Russian supply squeeze will push the country’s inflation to over 10% by fall. Nikou Asgari

Did UK mortgage approvals fall again in July?

UK mortgage approvals are expected to have fallen further in July, continuing a downward trend caused by rising mortgage rates and historically high inflation.

Economists polled by Reuters expect the Bank of England to reveal that 61,750 mortgages were approved last month, down from 63,726 in June and a peak of more than 100,000 in November 2020.

Against the tide, Sandra Horsfield, an economist at Investec, expects a slight increase [to 64,100] but added that “their trend is still pointing down – a picture which, as long as interest rates rise sharply and the economic outlook and confidence deteriorate, should remain in place.”

In June, data from the Bank of England showed that the interest rate on newly taken out mortgages had risen by 20 basis points (0.2 percentage points) to 2.15%, the highest since 2016, after six consecutive increases in key interest rates by the BoE.

Market prices imply that the policy rate should more than double to 4% early next year from its current level of 1.75% as energy and consumer prices continue to rise. to skyrocket.

As a result, consultancy Oxford Economics expects house prices to start falling on an annual basis from next year, down from the double-digit expansion earlier this year.

Soaring house prices will likely feel the pull of the gravity of the fall escalating cost of living, with the looming rise in the energy price cap set to further fuel inflation. and the specter of higher interest rates to combat rising prices and borrowing costs,” said Myron Jobson, senior personal finance analyst at investment services provider Interactive Investor. Valentina Romei

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