Markets await US jobs report; Lagarde says eurozone recovery remains fragile – business live | Business

Hello and welcome to our continued coverage of the global economy, financial markets, euro area and business.

Arguably the most important data release of the month for global investors, the US employment report, hovers over the markets today.

June non-farm payroll is expected to show a jump of around 690,000 jobs last month (although forecasts vary), from 559,000 in May, with the unemployment rate plunging to 5.7% from 5.8%.

Wages are expected to have risen 0.4% in the month and 3.7% in the past year as the reopening of the economy helped push wages up.

Investors will take a close look at the data, looking for new clues as to how quickly the Federal Reserve will change its monetary policy and start cutting its stimulus program – slowing the flow of cheap money into the markets.

A strong jobs report would boost confidence in the strength of the US recovery … while a weak report could show companies are struggling to hire in the scramble for staff.

Yesterday, the number of Americans filing new jobless claims hit a new pandemic low – highlighting the strength of the labor market.

But as Jim reid of German Bank underlines, more than 7 million jobs are still missing because of the Covid-19:

US DB economists expect a gain of +700,000 for non-farm payrolls, which in turn should help push the unemployment rate down by a tenth to a post-pandemic low of 5.7% .

Of course, even with an increase of + 700,000, that would still leave the total level of the non-farm wage bill -6.9 million below its February 2020 level, so there is still some way to go before returning to the normality before Covid. But before the report, we had a decent report on initial weekly jobless claims, which fell to a post-pandemic low of 364,000 (from 388,000 expected) for the week through June 26.

Wall Street hit records this week … Ipek Ozkardeskaya, senior analyst at Swissquote, says traders are looking for a strong number.

Given the steady decline in weekly jobless claims, we might expect to see a solid number, but it remains to be seen if it is above 700,000.

The market clearly needs a strong number to maintain its optimistic mood, as a surprise weakness in employment figures would not prompt the Fed to do more, as inflation hovers around a worrying level of 5% and it’s not even sure it’s a Peak. Also, another important thing here is average profit, which is expected to have risen to 3.7% in June – to cope with inflationary pressures, down from 2% a month earlier.

The fact that many people are now finding new jobs in an environment of rising inflation makes wage growth even stronger. And of course, if a possible fall in oil prices could temper inflation, higher wages are here to stay.

Oil is also on the agenda, OPEC + ministers will meet today to discuss whether to increase production. Yesterday’s meeting was delayed after the United Arab Emirates hesitated at a plan to add 2 million barrels per day (bpd) in the second half of the year.

The deadlock could lead oil-producing countries to refrain from increasing their production, says Bloomberg, falling back to conditions which call for stable production until April of next year.

Yesterday, Brent Crude hit its highest level since October 2018, rising $ 76 per barrel, with the prospect of supply remaining tight even as demand continues to improve.

But it’s currently a little lower, down 0.25% so far this session, to around $ 75.65, ahead of the meeting.

Agenda

• 10 a.m. BST: Eurozone producer price inflation index
• 1:30 p.m .: US unemployment report for June
• 3 p.m. BST: US factory orders for May