(Bloomberg) — U.S. employment likely rose in March after one of the biggest contractions in wages since the pandemic, extending a series of erratic numbers.
Economists estimate 60,000 jobs were added in the month following a decline of 92,000, according to a Bloomberg poll ahead of Friday’s report. The unemployment rate appears stable at 4.4%.
Wages have not increased for consecutive months since May of last year, indicating a labor market that lacks hiring strength but also few signs of a recession. Against this background of limited job opportunities, the conflict in the Middle East has revived American concerns about inflation as oil prices continue to rise.
Economists continue to cut earnings for March after disappointing January results that included weather-related declines in construction as well as leisure and hospitality activities. Health care costs are also likely to rise following the end of a strike by more than 30,000 Kaiser Permanente workers.
Slower job growth and increased price pressures will put consumer patience to the test. Retail sales data from Wednesday are expected to show demand continuing in February as car prices increase. Excluding car dealers and gas stations, economists are projecting another 0.3% growth.
Federal Reserve policymakers are weighing the sustainability of demand and moderate hiring against the potential for unwanted inflation spurred by higher energy costs. On Monday, Fed Chairman Jerome Powell will participate in a moderated discussion at Harvard University, where he will provide details on how he sees the fight affecting the balance of risks to inflation and employment.
“We expect March nonfarm payrolls to rise by 80k, reflecting a reduction in wages for those affected by the strike, sluggish private sector hiring and continued drag on government payrolls. The potential gain will depend on what is needed to keep the unemployment rate stable given current levels of labor force growth.”
-Anna Wong, Stuart Paul, Eliza Winger, Chris G. Collins, Alex Tanzi and Troy Durie.
Among other economic reports this coming week, the Center for Supply Management will release its manufacturing index for March. Economists predict the measure will show a third straight month of growing activity – the first time that has happened since 2022.
In Canada, the full domestic product data for January, along with the February Flash estimate, could show strong growth. A summary of the Bank of Canada’s discussions should clarify its decision to keep interest rates on hold. And February’s retail trade report is likely to show a persistent deficit amid US trade tensions.
The Group of Seven energy and finance ministers will meet for a virtual call on Monday, when countries from the euro zone to South Korea will release inflation data showing the impact of the war. Colombia’s central bank can offer very high interest rates.
The Asian data calendar will provide an early read on environmental demand and performance as Middle East conflicts cloud the global outlook and drive up energy prices.
The week begins with the Bank of Japan releasing a summary of sentiment from its March 18-19 meeting. India releases industrial production for February along with its annual budget deficit figure.
Attention turns Tuesday to Tokyo Japan’s inflation for March as well as labor market and sales indicators for February. The figures provide an up-to-date figure on price pressures and consumption as the Bank of Japan gauges normalcy.
The Reserve Bank of Australia released the minutes of its March meeting when it proposed a second consecutive rate hike.
Wednesday is key, with Japan’s Tankan survey and a full slate of PMI figures around the region following last week’s preliminary numbers from other major world economies.
Research results this time include China, South Korea, Indonesia and several Southeast Asian countries. The data will provide a snapshot of the factory’s performance after the US-Israel war against Iran hit energy supplies, sending oil prices soaring.
Australia releases building permits data for February amid an ongoing housing shortage while Indonesia has data on consumer prices and the trade balance.
South Korea publishes its inflation report for March on Friday, Australia has trade data and India publishes manufacturing PMIs.
Data showing the euro zone experienced the biggest increase in inflation this month since Russia invaded Ukraine in 2022 is expected on Tuesday. The increase in consumer prices after the US attack on Iran is seen by forecasters as having increased by 0.7 percent to 2.6 percent.
Those numbers will include a report from Germany on Monday, and France early the next day, as well as Italy and an estimate for the rest of the region. Various European Central Bank officials speaking during the week could respond to the reports.
Other euro area countries will also release consumer price figures. In Poland, the inflation rate is seen rising by 1.1 percent to a nine-month high.
In Switzerland, which has been struggling to generate inflation due to the strength of the franc, an acceleration to 0.5% in the national rate is predicted by economists. That will be the fastest since 2024.
The final measure of Italy’s deficit for 2025 will be released on Friday, in an important report showing whether the country has exceeded the 3% ceiling of GDP of the European Union. France will announce its industrial production figure for March on the same day.
In the UK, the record of the latest meeting of the Bank of England’s Monetary Policy Committee is due on Wednesday, which may shed some light on the uncertainty that has plagued the gilt market this month. The BOE’s Decision Maker Panel report, with price expectations, is due the next day.
The Mideast will focus on financial decisions this week:
On Monday, Israel’s central bank is expected to leave its interest rate at 4% as the war with Iran enters its fifth week and stokes inflation concerns. Officials will also release updated economic forecasts for the first time since the conflict began.
Egypt is likely to keep borrowing costs steady on Thursday as the impact of the war weakens its currency and increases fuel debt. The crisis is likely to fuel a new surge in inflation in the export-dependent country.
In Colombia on Tuesday, an earlier consensus called for the central bank to issue a second straight increase of 100 basis points, pushing the figure to 11.25%.
BanRep’s inflation is affected before the war in Iran, and now due to the increasing conflict that continues the monetary policy around the world, the estimate of the February rate of 11.75% may not last.
Many reports are available from Brazil next week including industrial production, the central bank’s market reading, the central government’s budget balance, planned job creation and the general price index IGP-M, which is the country’s broadest measure of inflation.
Chile to post minutes of March 24 central bank policy meeting, GDP-proxy data for February and copper production.
Officials held Chile’s key rate at 4.5% as expected, but a 54% increase in Iranian government fuel prices could mean the next step higher.
The conflict is doubly damaging to the country as slow global growth could reduce copper prices – its main export – while raising inflation, as Chile imports almost all of its fuel.
Consumer price data for the Peruvian capital of Lima released on Wednesday is expected to increase for the fifth month.
The leak of a key natural gas pipeline in early March caused Peru’s worst energy crisis in years, which however coincided with a sharp rise in Iran’s global oil prices. The central bank now sees a year-end inflation rate of 2.4%, down from an earlier forecast of 2%.
—With help from Swati Pandey, Laura Dhillon Kane, Monique Vanek, Robert Jameson, Mark Evans, Michael Gunn and Galit Altstein.
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