US Job Growth Is Seen Moderating on Shifting Trade Policy

Yahoo

2 days ago

(Bloomberg) -- The pace of US hiring probably slowed in May, with employers focusing on containing costs as households become a bit more guarded and businesses reconsidered investment plans against a backdrop of shifting trade policy.
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Economists see payrolls rising by 125,000 after job growth in March and April exceeded projections, based on the median of a Bloomberg survey. That would leave the average over the past three months tracking a still-solid 162,000. The unemployment rate is seen holding at 4.2%.
Employers seeking clarity around the White House's trade policy have instead been greeted with frequent adjustments to timelines and import duty schedules. President Donald Trump is deploying tariffs as a way to reverse imbalances, spark long-term investment in the US, and spur the domestic output of critical goods and materials.
Meanwhile, economic activity has settled back, with confidence surveys hinting at more modest consumer spending in coming months. Auto sales figures from Ward's Intelligence on Tuesday are expected to show purchases eased in May for a second month.
Concerned that revenue will suffer, companies are growing more conscious about cost-saving efforts that risk culminating in slower labor demand. The jobs figures on Friday will follow a Tuesday report on vacancies. The median projection calls for a decline in April to 7.1 million job openings, the fewest since the end of 2020.
What Bloomberg Economics Says:
'Our preliminary forecast range for May nonfarm payrolls is 60k-130k, with the central tendency clustering around 90k – lower than the consensus of 130k at the time of writing. We think one sector — leisure and hospitality — accounted for most of the weakness, as subpar international tourism and a pullback in government travel led to a slump in demand. However, construction, and transportation and warehousing – two sectors that typically provide the next most-important seasonal job growth in May – are holding up.'
—Anna Wong, Stuart Paul, Eliza Winger, Estelle Ou and Chris G. Collins. For full analysis, click here
Federal Reserve officials are likely to take the labor market reports in stride as they too await clarity on how trade and tax policy will impact the economy and inflation.
Investors will parse comments this coming week from Fed governors Lisa Cook and Adriana Kugler. Governor Christopher Waller also discusses the economic outlook on Sunday. The Fed will also issue its Beige Book on anecdotal economic conditions across the country.
On Thursday, economists project government figures to show a narrowing of the US trade deficit in April after tariff front-running at the start of the year. An improvement in net exports is expected to drive a big rebound in second-quarter gross domestic product.
For more, read Bloomberg Economics' full Week Ahead for the US
The Bank of Canada's rate decision is a close call, with core inflation heating up even as economic growth stagnates due to the US trade war. After data on Friday showed a slight acceleration in annualized growth, traders in overnight swaps further trimmed the odds of a 25 basis-point cut to 15%.
Earlier in the week, Prime Minister Mark Carney meets provincial premiers to discuss removing internal trade barriers, a crucial element of his plan to shore up the country's economy and offset the impacts of Trump's tariff assault.
Elsewhere in a packed week, the OECD presents new forecasts, central banks from the euro zone to India are set to cut interest rates, and inflation numbers are released in multiple economies worldwide.
Click here for what happened in the past week, and below is our wrap of what's coming up in the global economy.
Asia
Asia's economic calendar kicks off June with a slew of inflation, trade, and production numbers from powerhouses like Japan, India, and China. These will be key to assessing how economies are navigating cooling price pressures and shifting global demand.
Inflation data take center stage, with Indonesia, the Philippines, South Korea, Thailand, and Taiwan all reporting consumer price indices through the week.
China's schedule meanwhile shows Caixin's manufacturing index on Tuesday, and its services and composite PMIs on Thursday.
Other trade and production numbers dominate the week too. South Korea, a closely watched proxy for global demand, posts trade figures for May on Sunday.
Vietnam will release its manufacturing PMI Monday, offering a read on how factories there are faring amid US-led tariff uncertainty.
Elsewhere, Australia will report first-quarter gross domestic product on Wednesday, offering a clearer view of the economy's performance at the start of the year. That will be followed by trade data and household spending figures the next day.
On Friday, the Philippines is scheduled to post its unemployment rate, with analysts looking for signs of labor market resilience.
India will also be in focus on Friday, with the Reserve Bank expected to deliver a rate cut as inflation cools and growth risks mount.
For more, read Bloomberg Economics' full Week Ahead for Asia
Europe, Middle East, Africa
The European Central Bank is almost certain to lower borrowing costs on Tuesday for an eighth time. Investors are likely to focus on clues about further moves, and similarly on forecasts that President Christine Lagarde will present that will feature varying scenarios to account for the uncertain trade backdrop.
Informing officials this week will be a flurry of data in the euro zone. Inflation is anticipated to hit 2% for the first time in seven months in a release on Tuesday after reports showing weakening in the region's four biggest economies.
Compensation per employee, offering a full picture of wage growth, is due on Friday, too late for the ECB decision. Multiple reports on manufacturing will include industrial production in Spain, Germany and France, and trade and factory orders too.
In the UK, the focus will be on Bank of England appearances, most importantly testimony by Governor Andrew Bailey and three colleagues to Parliament on Tuesday.
Swiss inflation on Tuesday is forecast to show the first negative reading in four years. Consumer-price data are also due in Sweden, while Riksbank Governor Erik Thedeen is scheduled to speak on Monday and testify to lawmakers along with colleagues the following day.
Bulgaria will be in the spotlight on Wednesday, when the ECB and European Commission publish convergence reports on its readiness to adopt the euro. The same day, Brussels officials may scold neighboring Romania for its failure to deliver a fiscal plan to narrow the bloc's widest budget deficit.
Nearby, data from Turkey on Tuesday are expected to show inflation slowed to 36% in May. The same day, South Africa may reveal that its economy stagnated in the first quarter as sectors including manufacturing and mining contracted.
And on Friday, Mauritius' Prime Minister and Finance Minister Navinchandra Ramgoolam will deliver an annual budget. The new government faces a budget deficit nearing 10%, almost triple what had been forecast.
For more, read Bloomberg Economics' full Week Ahead for EMEA
Aside from the ECB, a handful of other central bank decisions are due:
On Tuesday, Lesotho, whose currency is pegged to the rand, may follow neighboring South Africa and lower its key rate by 25 basis points to 7%.
Poland's central bank is widely expected to keep borrowing costs on hold the next day.
Ukraine's decision is on Thursday. Officials already halted a series of hikes in April, expecting inflation to ease.
And on Friday, the Bank of Russia will consider whether to cut its rate — currently at a record high of 21% — amid increased calls for monetary easing and signs the economy is starting to cool.
Latin America
Consumer price data for Peru's megacity capital posted June 1 should show that inflation in Lima accelerated for a second month in May, though it isn't expected to have breached the 2% mid-point of the central bank's target range.
Peru boasts the lowest inflation among its peers in Latin America, and central bank chief Julio Velarde has said it will remain within target for the foreseeable future.
In Brazil, President Luiz Inacio Lula da Silva has made revamping the country's industry a priority, and output figures have run above the long-term trend since his return to office in 2023.
Against an average year-on-year rise of 0.7% overall since January 2003, industrial output under Lula 2.0 is running a percentage point higher at 1.7%, though half the 3.4% pace seen during the two terms of Lula 1.0 in 2003-2010.
The early consensus for the April data sees a small monthly rise and slowing in the annual pace from March's 3.1% reading.
Five purchasing manager indexes for May are due, with data through April showing a mixed but weakening picture in Brazil, mild expansion in Colombia and pronounced contraction in Mexico.
Chile's economy beat expectations in the three months through March, and this week's April GDP-proxy data may point to some acceleration toward mid-year.
Consumer prices may have ticked lower in May after cooling more than expected to 4.5% in April.
For more, read Bloomberg Economics' full Week Ahead for Latin America
--With assistance from Swati Pandey, Laura Dhillon Kane, Monique Vanek, Robert Jameson, Mark Evans, Beril Akman, Kamlesh Bhuckory and Greg Sullivan.
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