US hiring appetite is healthy as economy powers ahead

(Bloomberg) -- US hiring probably remained solid for a second month in September as economic momentum builds, even in the face of mounting cost pressures.

Economists estimate the jobs report due Friday from the Bureau of Labor Statistics will show nonfarm payrolls rose about 90,000 after climbing in the prior month by the most since March. The unemployment rate is seen remaining at a one-year low of 4.1%.

The catalyst for recent stronger hiring has, unsurprisingly, been the economy itself. Demand metrics highlight an extended and feverish pace of capital spending as well as improved consumer spending. That backdrop has allowed the Federal Reserve to turn its policy focus squarely toward inflation.

A separate report on Wednesday is forecast to show a 0.5% increase in August inflation-adjusted personal spending, which would be the biggest advance in just over a year.

That release will also include the Fed’s preferred inflation gauges. Both the personal consumption expenditures price index and the core measure — which excludes energy and food — are projected to quicken in August from a month earlier.

Investors will look to the report to reassess bets on whether the Fed will follow up this month’s interest-rate hike with another at their October meeting. Currently, odds favor a quarter percentage point increase next month.

What Bloomberg Economics Says:

“With two months of data in hand, it appears consumers remained resilient in the third quarter, with real consumption on track to grow more than 3% annualized. Personal income probably accelerated 0.5% (vs. 0.4% prior), supporting consumers.”

—Anna Wong, Andrew Sacher and Eliza Winger.

Also on Wednesday, the BEA will issue revisions to second-quarter gross domestic product as well as annual updates to national GDP as far back as early 2021. Methodological updates will also be made for consumer spending data and the PCE price index.

The busy calendar also includes August job openings figures on Tuesday and the Institute for Supply Management’s September manufacturing survey on Thursday.

In Canada, July growth is forecast to have stagnated as manufacturing and retail sales weakened. An advance GDP estimate for August will offer early insights into the economy as trade talks with the US collapsed. Bank of Canada officials Toni Gravelle and Carolyn Rogers will speak during the week.

Elsewhere, inflation data from the euro zone to Indonesia, monetary decisions in Australia and Colombia, and Brazilian data ahead of the upcoming presidential election will be among the highlights.

Below is our wrap of what’s coming up in the global economy.

Asia

Asia’s central banks and inflation outlook will take center stage as policymakers confront a tough mix of higher global borrowing costs, volatile energy prices, and gathering weather risks.

The Reserve Bank of Australia decides on monetary policy on Tuesday, with markets watching for another rate increase as officials grapple with stubborn inflation and the fallout from the Fed’s latest hike.

The decision will test how far policymakers may need to lean against price and currency pressures, even as higher borrowing costs sap economic activity and threaten growth.

Australia’s inflation report follows Wednesday. Price data elsewhere will show whether similar pressures are building, especially as the Middle East conflict keeps crude prices near $100 a barrel and El Niño climate pattern starts to hit food supplies.

Indonesia releases inflation data Thursday, while prints from South Korea and Vietnam are announced on Friday and Saturday, respectively.

Manufacturing PMIs will provide a key reading on regional demand that’s gotten a lift from the artificial-intelligence upcycle, particularly in Taiwan and South Korea. China’s factory activity shrank in August, but the official gauge is expected to rebound this month to above the 50 level, the line that separates expansion from contraction.

South Korean exports will offer further clues on whether Asia’s industrial economies can hold up as the global bond selloff tightens financial conditions and geopolitical and weather risks push up input costs.

Japan’s Tankan survey is expected to show sentiment at the nation’s largest manufacturers improving to the most optimistic level since December 2017.


Europe, Middle East, Africa

Euro-area inflation will hit its highest level in three years, according to forecasts ahead of data due on Friday, with the median forecast anticipating an outcome of 3.7%.

Separate gauges from Germany, France, Italy and Spain come out earlier in the week. Similar quickening is predicted, driven by energy costs.

Such results would add to the case for a third rate hike this year by the European Central Bank. Among several of its officials speaking in the coming days, President Christine Lagarde kicks things off with testimony on Monday to a European Parliament panel in Brussels.

In the UK, a number of Bank of England appearances are on the agenda, including one by Governor Andrew Bailey at a conference celebrating former policymaker Charles Goodhart. The central bank’s Decision Maker Panel survey will come out on Friday.

A final look at GDP in the second quarter, featuring expenditure components, is scheduled for Wednesday.

Minutes from Sweden’s Riksbank, which on Thursday shifted further toward a possible hike, will be released on Wednesday.

In Switzerland, the Swiss National Bank will publish a tally of its foreign-exchange interventions during the second quarter. The central bank has dialed down its language threatening such action to curb gains in the franc after a meaningful weakening in the currency.

With that move having stoked import costs, the SNB moderately raised its inflation forecasts. The latest reading of price growth on Thursday is anticipated by economists at 1%, which would be the fastest in two years. SNB President Martin Schlegel said in an interview broadcast on Saturday that the central bank is in a “comfortable situation” on inflation.

Romania is on the schedule of S&P Global Ratings for a potential credit-score update on Friday. The country, roiled by months of political turmoil, is at the lowest investment grade and in danger of a cut to junk.

Turning to Africa, external spillovers from the Iran and Ukraine wars could see Mozambique keep its rate steady at 9.25% on Wednesday as officials assess the risks to their inflation forecasts. Disinflation in Zambia will likely force a fourth successive cut in borrowing costs.


Latin America

Brazil’s Oct. 4 election is about to take center stage with opinion polls suggesting the presidential race — pitting 80-year-old incumbent Luiz Inácio Lula da Silva against 45-year-old right-wing challenger Flávio Bolsonaro — will advance to a run-off on Oct. 25.

Preceding the vote, both personal and government finances are front of mind for Brazil’s electorate as well as investors, who’ll be looking closely at the government’s August debt totals, budget balances, debt-to-GDP ratios.

Latin America’s No. 1 economy will also post reports on the current account, foreign direct investment, lending, unemployment and job creation along with the central bank’s market readout.

The highlight of the week’s reports from Chile will be August economic activity. July’s -1.7% tumble owed much to deadly rainstorms that halted some mining operations, but followed on from a dismal first half.

Citing concern that the “weakness may prove more persistent than anticipated,” Chile’s central bank cut its forecast for economic growth this year to between just 0.25% and 0.75%.

In Mexico, August trade, lending, the public balance and remittances are on the agenda, as well as the central bank’s monthly survey of economists. US and Mexican officials on Sept. 23 said they’d agreed to delay the fourth round of talks on the USMCA trade agreement revision, scheduled for September, until next month.

Colombia’s central bank is the lone major monetary authority in the region setting interest rates in the coming week, and the early consensus is for BanRep to hold at 12% for a second straight meeting.

Inflation numbers for August came in higher than expected, though analysts see peso appreciation and weakening activity and domestic demand persuading a majority of the bank’s board to hold fire.