Biden’s first US job report to show the challenge ahead: Eco Week

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The President of the United States, Joe Biden, is about to take a complete look at the job market he inherited.

Economists are expecting the January job report to show a stagnant and still high unemployment rate – standing at 6.7% – according to a Bloomberg survey ahead of Friday’s data. This is almost double the level before the pandemic hit early last year.

Monthly data is expected to show a slight increase in hiring, compared to the loss of 140,000 jobs in December. Although the US economy has shown strength in areas such as housing and manufacturing in recent months, the job market has struggled to gain momentum.

Last week, Federal Reserve Chairman Jerome Powell pointed to the millions of unemployed Americans as a sign that the economic recovery still has a long way to go.

What Bloomberg Economics says:

“The diverging ‘K’ range will be widely evident in the January job report, as sectors such as leisure, hospitality and restaurants / bars are expected to witness continued and significant job losses. While the economic situation of these displaced workers should certainly not be left unresolved, a crucial aspect of the employment report will be to decipher how far parts of the economy continue to recover. ”

–Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger. For the full note, Click here

Biden asked for an additional $ 1.9 trillion in economic aid to help offset the damage from the pandemic. If approved by Congress, it would provide additional supplementary unemployment benefits, help for state and local governments and additional direct payments to individuals.

This would increase the $ 900 billion package approved by lawmakers in December, which provided some support for employees and businesses. The continuing threat of the virus and the unstable distribution of vaccines, however, should weigh on hiring, especially in service sectors such as restaurants and hotels.

The US Treasury will announce its latest borrowing needs and how it plans to finance them this week. And the week will also include a flurry of regional Fed presidents talking about the labor market and the economy, including Raphael Bostic of Atlanta, Loretta Mester of Cleveland and James Bullard of St. Louis.

Elsewhere, PMIs across Asia provide the latest picture of the recovery state, while the euro area’s gross domestic product may herald the start of a double dip recession. The central banks of the United Kingdom, India and Australia are among those that have met, and Canada’s employment report is also due to be released.

Click here to see what happened last week and, below, our summary of what’s to come in the global economy.

Asia

Manufacturing PMI reports from Asian countries are expected to show the state of recovery in a region that was recently boosted by the effects of China’s strength. An official indicator from China industrial production published on Sunday fell for the second month in January, although it remains comfortably in expanding territory.

From India The budget will be announced on Monday, with a likely spending spree as the government tries to chart a way out of the pandemic-induced decline. The central bank meets on Friday.

South Korea’s export data in January will shed light on whether the recovery of momentum in global trade decelerated at the beginning of the year, as blockages limit activity in many major economies.

Japan’s Prime Minister Yoshihide Suga will probably decide whether to extend a Emergency state. It will weigh how much the current alerts contained infections against the economic damage of continuing any longer. Household spending figures for December are likely to show that consumers were already cutting back on spending before the new emergency was declared.

Finally, it is a busy week for Reserve Bank Governor of Australia Philip Lowe. He will announce a political decision on Tuesday, give a speech on Wednesday and release his quarterly Monetary Policy Statement on Friday, before being questioned by a parliamentary committee later in the day.

Europe, Middle East, Africa

With the expectation that the Bank of England will let its current dose of monetary stimulus run its course, attention will focus on its assessment of the latest economic blockade and the viability of negative interest rates as a relief tool. The BOE is likely to endorse the measure, but suggests that it is in no hurry to reduce borrowing costs below zero.

Central banks in Poland, the Czech Republic, Iceland, Ghana, Mauritius and Egypt should also keep rates on hold this week.

In relation to the data, GDP in the fourth quarter of eurozone probably show that the economy has contracted, although The surprising resilience in Germany, Spain and France could mean that the region as a whole may not be as bad as it feared. Sweden, Latvia, Serbia and the Czech Republic also publish production data.

Russia is expected to report on Monday that its economy shrank 3.8% in 2020, a less dramatic blow than seen in many economies because of its relatively small service sector.

Latin America

Peru’s consumer price data for January on Monday is expected to bring the annual rate close to 2%. The central bank predicts it will slow to 1.6% this year.

In 2020, Colombia beat Peru by presenting the slowest annual inflation rate among the largest economies. The data released on Friday will show a slight increase, but leaving the title number well below the target. Analysts expect Chile’s economic activity figures released on Monday to turn negative as the uneven recovery from the recession is slowing.

Monday afternoon, export and import data from Brazil. Surprisingly, trade plays a relatively modest role in the largest economy in Latin America, which is one of the least open among peers in the Group of 20. Colombia’s central bank on Monday night publishes the minutes of its meeting on 29 January, where lawmakers maintained their base rate record of 1.75%.

See Brazil’s industrial production report released on Tuesday to show a fourth annual increase in December. A drop from November suggests that the pace of recovery is moderating.

– With the help of Malcolm Scott, Vince Golle, Benjamin Harvey, Robert Jameson and Alaa Shahine