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The US economy was supported by a strong job market last year, which also boosted stock markets. Data to be released on Friday will show if this trend continued towards the end of the year.
In November, economic data presented a mixed picture. Non-farm payrolls, a key indicator for the US job market, increased by 227,000, surpassing expectations. However, the household survey showed a surprise rise in the unemployment rate from 4.1% to 4.2%, causing concerns about a potential weakening in the overall job market.
Economists predict that the non-farm payrolls report for December will reveal the creation of 150,000 new jobs, with the unemployment rate remaining stable.
Chief economist at the Bank of Singapore, Mansoor Mohi-uddin, stated, “If December’s data shows stable unemployment, the risk of a US recession this year will remain low, benefiting risk assets.”
The upcoming data will also offer insights for the Federal Reserve’s meeting later this month. The Fed has implemented a series of interest rate cuts since September, bringing rates to a range of 4.25 to 4.5%. While no further rate cuts are expected at the January meeting, a weakening job market could spark discussions about potential future pauses.
Market reaction to Friday’s data may be influenced by the closure of US stock exchanges on January 9 for President Carter’s funeral, as well as early closures in bond markets on Thursday. Jennifer Hughes
Will Eurozone inflation support Christine Lagarde’s positive outlook?
Investors and analysts will analyze the latest Eurozone inflation data on Tuesday to assess alignment with the European Central Bank’s optimistic projections.
Last month, ECB President Christine Lagarde expressed confidence in overcoming price growth pressures in the region, stating, “The direction is clear, and we anticipate further interest rate reductions.”
Analysts anticipate that Eurostat’s data will show headline inflation remaining at 2.2% from November, with core inflation at 2.7%.
The ECB has indicated a willingness to overlook temporary inflationary spikes caused by unique factors, such as a previous drop in energy prices. Inflation in the Eurozone has declined faster than expected, while economic growth has been disappointing.
While Goldman Sachs economists predict a slight increase to 2.4% in headline inflation, they believe that core inflation in the Eurozone will decrease in the coming months.
Investors are anticipating a quarter-point rate cut later in January, potentially followed by additional cuts throughout the year to maintain a neutral stance on economic activity. Olaf Storbeck
Will deflation persist in China?
Thursday’s Chinese inflation data will offer insights into Beijing’s efforts to counter deflationary pressures stemming from a significant property crisis.
Analysts expect China’s consumer prices index to have grown by 0.2% year-on-year in December, reflecting challenges in the country’s economy.
Despite government stimulus measures, including rate cuts and increased spending, deflationary pressures persist in China, necessitating further monetary policy interventions.
Beijing aims to boost household consumption and align its monetary policy with global standards, planning interest rate cuts to stabilize the economy. Mari Novik