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US Labor Market: Will it Slow Down Further?
Economists predict that US hiring will have slowed in July, which may impact the Federal Reserve’s decision to maintain interest rates this autumn.
The labor department’s report, expected on Friday, is projected to show that the US added 184,000 jobs in July, down from the previous month’s 209,000. The unemployment rate is expected to remain at 3.6%, and average hourly earnings are predicted to have slowed to 0.3% from the previous month’s 0.4%.
While US employment has remained strong despite interest rate hikes, June saw a larger slowdown than expected. Investors and economists will closely observe if this trend continues.
The Federal Reserve, too, is watching the employment figures. Following a recent interest rate increase, they are undecided about raising rates again in September. A strong employment report may support further rate hikes, while a weak report may lower confidence in tightening monetary policy.
Kate Duguid
Will the Bank of England Raise Interest Rates?
Market opinions differ on the Bank of England’s upcoming interest rate decision.
Following a surprise 0.5% rate rise in June, expectations of a similar move on August 3 were fueled by strong pay growth data. However, lowered expectations followed June’s inflation data, which showed a cooling rate of 7.9%.
Currently, the majority predicts a 0.25% rate increase, representing a 70% probability. Economists polled by Reuters also favor a 0.25% hike. This aligns with recent moves by the US Federal Reserve and European Central Bank.
Yet, some major banks anticipate a 0.5% increase to 5.5%. “Core inflation surprised to the downside in June, but this good news should not be overstated,” said Imogen Bachra from NatWest. She believes higher wage inflation and high service inflation increase the likelihood of a 0.50% hike.
Mary McDougall
European Economy: Will it Return to Growth?
Economists predict that the eurozone will experience slight growth in the second quarter, along with falling inflation in July.
In the past two quarters, the eurozone’s GDP stagnated or even slightly contracted. However, economists forecasted a 0.1% growth for the three months up to June.
Inflation is also expected to decrease, despite a rise in Spanish prices. Economists predict a 5.2% increase in consumer prices, the slowest rate since January 2022.
The European Central Bank will closely monitor these numbers. After a recent interest rate increase, they raised the possibility of pausing further increases in September.
Riccardo Marcelli Fabiani, an economist at Oxford Economics, described the national inflation data as “a mixed bag.” However, he believes it does not indicate a halt in the eurozone’s current disinflationary trend.
Martin Arnold
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