- ● Numbers. The closely-watched employment report scheduled for release next Friday should show that the US economy is still shedding jobs at a rapid pace. That at least is the message from our short-term model, based on the initial jobless claims and the employment component of the ISM Indices (pages 4-6).
- ● Forecast. These leading labor market indicators are, however, not really sufficient to make a medium-term payroll forecast. More suitable in this respect is the relatively new Employment Trend Index published by the Conference Board (cf. chart). It suggests US firms will continue to shed lots of jobs into the fall. We expect roughly 70k per month.
- ● Fed. It should be the turn of the year before the US labor market gradually finds a floor again. That would be then the signal for the Fed to start to reverse its massive monetary policy easing. So far, the Fed has always waited until the labor market showed initial signs of stabilization before raising its key interest rate.
● Further topics:
- – Weekly Comment: Oil price – fundamentally bubbly? (page 2).
- – Germany: Recession risk has increased considerably (page 7).
- – Spain: Housing contraction has just begun (page 9).
- – US: Demand for oil is falling (page 11).
- – Data outlook: EMU economic confidence declines further; US GDP still shows solid Q2 growth (page 14).
- – Market outlook: Govies to tend sideways next week; USD well supported (page 21).
