The U.S. labor market has been consistently adding jobs since the economy rebounded from the pandemic. However, recent banking industry turbulence has added economic risk and raised concerns about the labor market’s resilience. In other news, India’s central bank kept its policy rate unchanged amidst global economic uncertainty caused by the banking sector’s recent turmoil. The Reserve Bank of Australia also announced a pause in its aggressive campaign of rate hikes earlier this week. Meanwhile, the World Trade Organization has predicted that global trade growth will slow down due to the war in Ukraine and stubborn inflation worldwide. This will restrain economic recovery despite the world emerging from the pandemic.
The Labor Department will release its March jobs report on Friday, following robust job growth in January and February. Here are some signals to watch out for early clues on changes in labor-market momentum. In addition, investors believe that a general slowdown and tighter lending conditions arising from the banking sector turmoil will prompt the Federal Reserve to loosen monetary policy earlier than expected.
Other key developments around the world include South African insurers taking over public services in a country ranked as the most unequal on earth, the growing CEO pay gap between the US and the UK, and at least 10,000 foreign companies facing EU sustainability rules.
On Friday, the US employment report for March will be released. Capital Economics economist Stephen Brown predicts that the Bank of Canada will start cutting interest rates in October, as disinflationary forces build, despite underlying price pressures remaining well above the Bank of Canada’s inflation target range. UBS strategists have also expressed concerns about the growing risks in the commercial real-estate market and the potential spillover to banking and the economy, as higher financing costs add to existing challenges around servicing debt.
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