New York: A likely moderation in US hiring in the monthly employment report on Friday will give policy makers a measure of the health of the labour market and the threat posed by the delta variant of the coronavirus.
The US probably added 750,000 jobs in August, a slowdown from June and July but well above the pace seen earlier this year, according to the median of economists’ forecasts.
The outcome will inform Federal Reserve officials gauging the economy as they look to wind down stimulus later this year. Fed Chair Jerome Powell, acknowledging that a taper in bond purchases may be warranted, said last week that the delta variant “remains a near-term risk,” though prospects toward maximum employment are good.
“The intervening month has brought more progress in the form of a strong employment report for July, but also the further spread of the delta variant,” he said during a virtual speech at the Kansas City Fed’s annual Jackson Hole symSlow recovery anticipated
Slow recovery anticipated
While job growth has been improving, labor-force participation - the share of Americans either working or looking for work - has been stuck near the lowest level since the 1970s for nearly a year. Forecasters had expected that high vaccination rates and the reopening of schools would help bring workers back into the labor force this fall, but the rapidly spreading delta variant could shift that outlook as health concerns grow and some schools delay in-person instruction.
Ahead of the jobs report, private payrolls data from the ADP Research Institute on Wednesday could give an indication of the pace of hiring. The week will also bring data on pending home sales and manufacturing.
Provided job growth looks strong enough, Fed officials may discount growing signs of weaker third-quarter momentum - particularly on the consumer spending side. That puts emphasis on the August ISM manufacturing index and vehicle sales, consumer confidence, and the ISM services index to flesh out whether it is supply-side problems holding back growth or more worrying demand-side troubles.
Key Asian data
The latest production and retail sales figures from Japan will show how the economy was faring in July as a resurgence in virus cases to record levels piled pressure on policy makers to restart and extend a state of emergency. Bank of Japan Deputy Governor Masazumi Wakatabe and board member Goushi Kataoka will give their takes on the economic and policy outlook following Powell’s Jackson Hole speech.
Trade figures from South Korea could give further backing to the Bank of Korea’s view that the economy has enough strength to withstand higher rates and the latest wave of COVID-19. GDP figures from Australia will give a snapshot of the strength of the economy before the onset of extended lockdowns.
China’s purchasing managers indexes will be closely watched on Tuesday amid signs the recovery there is losing steam, while reports from across the region on Wednesday will show how the spreading delta variant and supply chain snarls are affecting sentiment.
India’s second quarter GDP numbers are set to surge from a year earlier, when COVID-19 lockdowns slammed the brakes on the economy.