The U.S. labor market shifted into a higher gear in March as the nation made progress in an effort to put the pandemic in the rear-view mirror.
Economists project a government report will show the largest employment increase in months as vaccinations increase and economic activity, including robust manufacturing, picks up. The median estimate in a Bloomberg survey of economists is for the unemployment rate to fall to 6% as nonfarm payrolls rise 643,000.
Policy makers including Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen expressed confidence last week in the path of the labor-market rebound.
While the central bank sees unemployment declining to 4.5% by year end — a relatively muted forecast — Powell emphasized the “highly desirable outcome” of workforce participation expanding. Meanwhile, Yellen said supplemental unemployment aid likely wouldn’t be necessary later this year.
More than 2 million Americans are getting vaccinated each day, and President Joe Biden has said states should make every adult eligible for a shot by May 1. At the same time, many states are loosening restrictions on businesses and activity. Higher-frequency data out last week also pointed to a recovering jobs market, as applications for regular unemployment insurance dropped to a pandemic low.
Other parts of the economy have already reached or even surpassed pre-pandemic levels. After a slew of positive regional manufacturing data points, the Institute for Supply Management’s factory index, out Thursday, will give a look at the state of the sector in March. In February, it surged to a three-year high.
What Bloomberg Economics Says:
“Economic data already started to stir vigorously ahead of relaxed social distancing measures, broad vaccinations and the latest round of fiscal stimulus. From retail activity to industrial production, signs of a robust reacceleration have been increasingly plentiful over the past few months. Even so, the March jobs report will mark a tipping point, whereby the economy clearly shifts into a much faster pace of growth — one not witnessed in a generation.”
–Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger. For full analysis, click here
Biden on Wednesday will be presenting his longer-term economic program, dubbed Build Back Better, spanning infrastructure and technology investments to a revamp of the tax code to help address widening income inequality. In advance of Biden’s speech in Pittsburgh, his aides have prepared some $3 trillion worth of proposals, according to people familiar with the matter.
Elsewhere, efforts will intensify to shift a giant ship stuck in the Suez Canal that threatens to jam up supply chains by blocking a crucial trade artery of the world economy. The World Trade Organization reveals new forecasts for global commerce and central banks in Kenya, Angola and Chile set rates.
Click here for what happened last week and below is our wrap of what is coming up in the global economy.
China’s PMI reading for March on Wednesday is Asia’s biggest release of the week, with economists expecting a pick up in activity after a pullback at the start of the year. Regional reports follow the next day.
The Bank of Japan will release Monday a summary of talks from its most important meeting in 4 1/2 years. The comments will be closely scrutinized to see which measures might still be subject to further change and for more details on the reasons behind the changes.
Unemployment, production and retail-sales data from February will show how much strain Japan’s economy was under at the height of its recent state of emergency. The BOJ’s Tankan business survey is likely to indicate Thursday that big manufacturers are reaching a threshold of optimism after the emergency was lifted and with global trade recovering.
South Korean export data for the full month of March should give the latest indication of how strong that recovery is.
Europe, Middle East, Africa
With continental Europe still struggling to get its vaccine program going and fighting new flareups of the coronavirus, euro-area inflation and economic confidence data will show the state of the recovery. Final PMI data are likely to confirm that German manufacturing increased at a record pace in March.
In the U.K., house price data and fourth-quarter gross domestic product components are set to provide a snapshot of the economic rebound.
Kenya’s central bank will probably keep its key interest rate unchanged for a seventh straight meeting on Monday as the country reports increases in Covid-19 cases and inflation is at a 10-month high.
Angola’s central bank, which last moved interest rates in May 2019, is also set to hold as it seeks to support the economy and temper inflation by adjusting the amount of currency in circulation, rather than through interest rates.
Russia, Botswana and Mauritius all report fourth-quarter GDP figures in the week.
Brazil’s benchmark consumer-price index is over-target and the central bank is playing catch-up. Figures posted Tuesday will likely show the March reading of the country’s broadest measure of inflation nearing an all-time high.
Argentina’s economic activity for January should show a ninth-straight monthly gain. After a 9.9% plunge in GDP last year, the economy may expand as much as 7% in 2021.
Banco Central de Chile is in no hurry to tighten, especially with Santiago, home to roughly 40% of the population, back in lockdown. Analysts expect the key rate to stay at a record-low 0.50% Tuesday. Later in the week, Chile’s unemployment rate likely inched closer to a single-digit and economic activity may have posted a year-on-year gain in January.
Jobs data for January from Brazil most likely will look the part of a “K-shaped” recovery: gains in formal sector employment set against a rise in overall unemployment with millions still out of the workforce.
For evidence that Brazil’s recovery is faltering, look no further than the January industrial production data posted Thursday. The monthly and annual figures should be positive, but only just.
— With assistance by Benjamin Harvey, Malcolm Scott, and Chris Anstey