Biden’s First U.S. Jobs Report to Show Challenge Ahead: Eco Week

(Bloomberg) -- U.S. President Joe Biden is about to get the first full look at the labor market he inherited.

Economists are expecting the January jobs report to show a stagnant and still elevated unemployment rate -- holding at 6.7% -- according to a Bloomberg survey ahead of Friday’s data. That’s nearly double the level before the pandemic struck early last year.

​The monthly data are projected to show a slight uptick in hiring, compared with a loss of 140,000 jobs in December. While the U.S. economy has shown strength in areas like housing and manufacturing in recent months, the labor market has struggled to build momentum.

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

What Bloomberg Economics Says:

“The divergent ‘K’ track will be broadly evident in the January jobs report, as sectors such as leisure, hospitality and restaurants/bars are due to witness ongoing, significant job losses. While the economic plight of those dislocated workers must certainly not be left unaddressed, a crucial silver lining of the jobs report will be to decipher the extent to which some portions of the economy continue to recover.”

--Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger. For full note, click here

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

That would augment the $900 billion package approved by lawmakers in December, which has provided some support to employees and businesses. The continued threat of the virus and choppy rollout of vaccines, however, is expected to weigh on hiring, especially in service industries such as restaurants and hospitality.

The U.S. Treasury will this week announce its latest borrowing needs and how it plans to fund them. And the week will also include a flurry of regional Fed presidents speaking on the labor market and economy, including Atlanta’s Raphael Bostic, Cleveland’s Loretta Mester and James Bullard of St. Louis.

Elsewhere, China PMIs give the latest snapshot of the state of recovery in the world’s second-biggest economy, while euro-area gross domestic product may herald the start of a double-dip recession. Central banks in the U.K., India and Australia are among those meeting, and Canada’s jobs report is also due.

Click here for what happened last week and below is our wrap of what is coming up in the global economy.

Asia

China’s manufacturing PMI report for January is expected to moderate a little, though remain comfortably in expansion territory. That release on Sunday will be followed by similar reports from countries across the region that have been boosted recently by spillovers from China’s strength.

India’s budget will be announced Monday, with a spending binge likely as the government tries to chart a way out of the pandemic-induced slump. The central bank meets Friday.

South Korea’s January export data will shed early light on whether recovering momentum in global trade has slowed at the start of the year as lockdowns limit activity in many major economies.

Japan’s Prime Minister Yoshihide Suga is likely to decide on whether to extend a state of emergency. He will weigh how much the current advisories have contained infections against the economic damage of continuing for longer. Household spending figures for December will probably show consumers were already paring back outlays before the renewed emergency was declared.

Finally, it’s a busy week for Reserve Bank of Australia Governor Philip Lowe. He will announce a policy decision on Tuesday, give a speech on Wednesday and release his quarterly Statement on Monetary Policy on Friday, before being grilled by a parliamentary committee later that day.

• For more, read Bloomberg Economics’ full Week Ahead for Asia

Europe, Middle East, Africa

With the Bank of England expected to let its current dose of monetary stimulus run its course, attention will focus on its assessment of the latest lockdown on the economy and the viability of negative interest rates as an easing tool. The BOE will likely endorse the measure but hint that it’s in no rush to take borrowing costs below zero.

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

On the data front, fourth-quarter GDP from the euro zone will probably show that the economy contracted, though surprising resilience in Germany, Spain and France could mean that the region overall may not be doing as badly as feared. Sweden, Latvia, Serbia and the Czech Republic also publish output data.

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

• For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Peru’s consumer price data for January out Monday should put the annual rate near 2%. The central bank forecasts that it will slow to 1.6% this year.

In 2020, Colombia beat out Peru to post the slowest annual inflation rate among the bigger economies. Data out Friday will show a slight uptick, but leaving the headline figure still well below target. Analysts expect Chile’s December economic activity figures published Monday to turn negative, as the uneven recovery out of recession has been slowing.

Monday afternoon sees Brazilian export and import data. Surprisingly, trade plays a relatively modest role in Latin America’s biggest economy, which is one of the least open among Group of 20 peers. Colombia’s central bank late Monday posts the minutes of its Jan. 29 meeting, where policy makers kept their key rate at a record-low 1.75%.

Look for Brazil’s industrial production report out Tuesday to show a fourth monthly year-on-year rise for December. A falloff from November would suggest the pace of recovery is moderating.

• For more, read Bloomberg Economics’ full Week Ahead for Latin America

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