Feb 1, 2019, by Lorcan Roche Kelly
The longevity of the U.S. economic expansion will be underscored by payrolls data at 8:30 a.m. Eastern Time showing a record 100 months of hiring gains — in a row, according to economist surveyed by Bloomberg. Expectations are for 165,000 new positions to have been added in January, the unemployment rate to hold at 3.9 percent and average hourly earnings to rise 3.2 percent from a year earlier. While the headline number will be well down on December’s whopping 312,000, economists are almost unanimous that the tight labor market will continue well into 2019.
While both the U.S. and China cited progress at the high-level trade talks in Washington, they stopped short of announcing a breakthrough that would end the conflict. They agreed to strengthen cooperation on technology transfers and intellectual property rights, while China said it would buy more U.S. goods. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer will visit the Beijing in mid-February to hold the next round of talks ahead of the March 1 deadline for avoiding further tariffs.
Headline euro-area inflation slowed to 1.4 percent in January, with core inflation – which strips out volatile fuel and food costs – unexpectedly rising to 1.1 percent. Italian bonds fell after manufacturing PMI data this morning came in at 47.8, adding to worries about the economy which fell into recession in 2018. A similar number for the U.K. fell to a three-month low of 52.8, with data showing that inventory holdings grew at the fastest pace in the 27-year history of IHS Markit’s survey as businesses brace for Brexit.
Overnight, the MSCI Asia Pacific Index slipped 0.1 percent while Japan’s Topix index closed 0.2 percent lower as disappointing China PMI data overshadowed optimism on trade talks. In Europe, the Stoxx 600 Index was broadly unchanged at 5:50 a.m., with banks the worst performers following a disappointing round of results. S&P 500 futures were flat ahead of the jobs number, the 10-year Treasury yield was at 2.627 percent and gold was holding its recent gains.
Once the dust settles on payrolls, there’s plenty of other data to gauge the health of the U.S. economy. At 9:45 a.m., Markit’s U.S. manufacturing PMI is published, with ISM figures at 10:00 a.m. The latest University of Michigan consumer sentiment numbers are also released at 10:00 a.m. And the Baker Hughes rig count is at 1:00 p.m. on a big day for oil investors, with Exxon Mobil Corp. and Chevron Corp. among companies reporting earnings.