In a series of economic reports released this week, a mixed picture of global market conditions emerged, highlighting changes in job markets, inflation expectations, and currency movements. In December, job openings in the United States, measured by the JOLTs report, declined to 7.6 million. This follows a solid rebound in November. Meanwhile, the University of Michigan reported an increase in consumers' one-year inflation expectations to 4.3%, indicating growing concerns about rising prices. On the employment front, indices from both the Institute for Supply Management (ISM) and Purchasing Managers' Index (PMI) suggested strengthening in employment. However, the "jobs plentiful" index from the National Federation of Independent Business (NFIB) fell to its lowest level since September, reflecting some caution among small businesses.
The UK economy showed resilience, expanding at an annual rate of 1.4% in the fourth quarter, surpassing market expectations of 1.1%. This growth comes amidst ongoing challenges and uncertainties in the global economic landscape.
The annual benchmark revisions to Nonfarm Payroll (NFP) data from April 2023 to March 2024 were less negative than anticipated, recording a revision of -598,000. The unemployment rate continued its downward trend, reaching 4.0%. Despite this positive development, wage growth accelerated more than expected, increasing by 0.5% month-over-month seasonally adjusted (m/m SA) and 4.1% year-over-year (y/y). However, productivity growth weakened towards the end of 2024, with a quarterly growth rate of 1.2% seasonally adjusted annual rate (q/q SA AR), while unit labor costs rose by 3.0% q/q SA AR.
In January, NFP growth slowed down to 143,000, though data for the previous two months was revised upwards by 100,000. This revision suggests that earlier concerns might have been overstated.
In the currency markets, the EUR/USD remained well-bid above 1.0400 during the European session on Thursday. Similarly, the GBP/USD maintained its bullish momentum, trading near 1.2500. These movements reflect relative stability in major currency pairs amidst broader economic uncertainties.
Gold's price continued its upward trajectory, resuming its rally near $2,920 at the time of writing on Thursday. The precious metal's rise is often seen as a hedge against inflation and economic uncertainty.
The decline in December's JOLTs job openings underscores ongoing challenges in matching job seekers with available positions despite an overall recovery in employment indices. The rise in consumers' inflation expectations may signal potential future increases in costs of living, which could impact consumer spending and economic growth.
The UK’s stronger-than-expected economic expansion may provide some relief amidst global economic pressures but also raises questions about sustainability amid challenges such as inflationary pressures and geopolitical tensions.
The positive revisions to NFP data and the continued decline in unemployment rate indicate underlying strength in the labor market. However, the acceleration in wage growth and rising unit labor costs could pose challenges for businesses facing increased input costs.