Will US inflation warrant faster Fed throttling?
Federal Reserve Chairman Jay Powell said in a testimony to the Senate last Tuesday that he no longer viewed inflation as “temporary” and signaled openness to the pace of monetary policy from the central bank during the crisis accelerate.
November consumer price index data released on Friday will provide the Fed with clues as to how fast inflation is advancing and whether a faster withdrawal of its monthly government bond purchases is warranted. This debate is expected to take place at the next meeting of the Central Bank’s Political Decision-Making Committee on May 14-15. December take place.
“The November CPI update has more potential than an immediate impact on the path of Fed action, although at the end of the day there are expectations that the inflation numbers will only serve as further justification for reducing QE [quantitative easing] faster, ”said Ian Lyngen, head of US rate strategy at BMO Capital Markets.
Last month’s CPI data showed that consumer prices had risen the fastest in three decades. In October prices rose by 6.2 percent compared to October of the previous year and 0.9 percent compared to the previous month and thus clearly exceeded the forecast level of 0.6 percent. Economists surveyed by Refinitiv forecast an increase of 0.7 percent for November.
Rising energy costs were one of the biggest drivers of inflation in October, with the CPI energy index increasing by 4.8 percent compared with the previous month. Gasoline prices at the pump fell in November, but were still consistently above prices in October, according to the US Energy Information Administration. Kate Duguid
Did UK growth return to pre-pandemic levels in October?
The UK economy may have rebounded in October to levels not seen since the introduction of Covid-19, helped by positive momentum ahead of the Christmas holidays.
Economists polled by Reuters believe GDP rose 0.5 percent between September and October – before global markets were rocked by news of the Omicron coronavirus variant in late November.
Sandra Horsfield, an economist at Investec, is more optimistic than the consensus and expects an expansion of 0.7 percent. Horsfield said this was “mainly due to the boom in services,” which, according to encouraging labor market data, grew 0.9 percent after the vacation program ended.
UK GDP was still 0.6 percent below February 2020 in September, which means that new data released on Friday on the Monthly Display could show that October production recovered to pre-pandemic levels .
Horsfield said there was “little doubt that the economy got back on its feet in October,” considering only the magnitude of the increase. IHS Markit’s purchasing managers’ index (PMI) rose to a three-month high in October. Retail sales also rose faster than expected and consumer activity metrics such as banking transactions and footfall have improved.
The impact of supply chain disruptions, with many factories not receiving the materials they need to meet demand, is expected to have weighed on production output. But Horsfield’s forecast of a 0.5 percent decline in October is grim than the 0.1 percent widening of the consensus.
The data will be released ahead of the Bank of England’s monetary policy meeting in December, when some economists are anticipating a rate hike. It is possible that Omicron’s coronavirus variant is preventing the bank from streamlining, but “we doubt these GDP numbers will,” Horsfield said. Valentina Romei
When will the US labor market return to normal?
The demand for labor is extraordinarily high and the number of them in the United States is extremely limited.
Americans will get a glimpse of how workers are coping with this scenario on Wednesday when the Department of Labor releases its survey of job vacancies and labor sales for the month of October.
Workers have quit their jobs en masse this year, likely because they were showered with better offers. The September issue of Jolts showed a streak of 4.4 million US workers quitting their jobs. The previous record was set in August.
Economists say that many of those who quit likely had other roles. Many assume that the high number of layoffs is likely to continue as long as competition for workers remains fierce and employers woo their competitors for top talent to fill vacancies.
After the Labor Department reported on Friday that labor force participation is improving, but employers only created 210,000 jobs in November – less than half of the 550,000 they expected – economists will be watching closely whether employers are able to hire new workers to find recruit in October. Salary numbers released for October have been strong, so the number of appointments is also expected.
The timing of the report means it could show a surge in the withdrawal of the delta coronavirus variant, just as the world is grappling with the spread of the Omicron variant. But it could also show the rebound is more volatile than hoped, like last week’s job report.
“The basic dynamics of the labor market are still strong, but [November] shows more uncertainty than expected, ”said Nick Bunker, economist at Indeed job exchange. Taylor Nicole Rogers
