Mapping the Global Economy: The U.S. Job Market Is Accelerating

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(Bloomberg) — The U.S. labor market strengthened in November with a recovery in employment and wages, dashing hopes that the Federal Reserve would cut interest rates early next year.

The acceleration in payrolls is at odds with recent reports of a slower pace of hiring, an outcome favored by the Fed because it will help curb demand and control price pressures. Officials are still expected to leave rates unchanged when they meet next week.

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Elsewhere, Japan’s economy contracted in the third quarter more than initially expected, while Brazil’s barely grew during the period. Economists are betting on a steeper slowdown in Hong Kong given challenges from China and rising interest rates.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

WE

Payroll increased by 199,000 last month after increasing by 150,000 in October. The return of striking auto workers helped boost the number by 30,000. Strong labor market numbers shift focus to inflation numbers next week as Fed officials gauge how long it will be necessary to keep interest rates at the peak of this cycle.

Consumer confidence rebounded strongly in early December, exceeding all forecasts, as households revised their inflation expectations for the coming year downwards, which had never been so significant in 22 years. Consumers expect an annual price increase of 3.1% in the coming year, the lowest level since March 2021. The 1.4 percentage point drop from the previous month is the largest since October 2001.

World

Price increases in OECD countries slowed in October to their lowest level in two years, a sign that advanced economies are overcoming their worst inflationary crisis in decades. The headline measure for the 38-member club, which includes all Group of Seven economies, fell from 6.2% to 5.6%, as pressures on food costs quickly eased and food prices energy prices have fallen in most countries.

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The Panama Canal, a century-old engineering marvel that revolutionized global trade, is closed due to drought and is forcing shippers around the world to face a painful choice. Each option adds costs, at a time when governments around the world are struggling to control inflation.

Israel’s central bank almost completely halted its unprecedented monetary interventions in November, as the shekel rebounded alongside a rise in U.S. stocks while the war against Hamas remains relatively contained. Kenya surprised with the biggest interest rate hike in over a decade. Canada, Australia, Poland, Namibia, Uganda, Serbia and India left their rates unchanged.

Europe

Industrial production in Germany and Italy fell at the start of the final quarter of the year, after France and Spain reported similar results, pointing to a possible recession in the region.

Asia

Japan’s economy has suffered its fastest contraction since the height of the pandemic, a result that complicates Bank of Japan policy amid growing speculation that it is moving closer to scrapping the latest negative rate regime in the world. Gross domestic product contracted at an annualized rate of 2.9% in the three months through September from the previous quarter.

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Japanese investors are spending the most in two decades on overseas properties, undeterred by the global housing crisis and the fall of the yen to a 50-year low. Flush with cash and in the only developed economy with access to ultra-low financing rates, their purchases provide some relief to the market as rising office vacancies and interest rates drive away other buyers.

Assets held by South Korean households declined for the first time in a decade after the central bank quickly raised interest rates, contributing to a correction in the property market.

Hong Kong’s economy will likely grow slower than expected this year and next as challenges from China’s slowdown and the impact of high interest rates weigh on the financial hub. The cuts reflect a tepid post-pandemic recovery, with growth weak despite a boost this year from the recovery in tourism, and suggest that tough times still lie ahead for the Asian financial center.

Emerging Markets

Brazil’s economy grew unexpectedly in the third quarter, providing a temporary boost to President Luiz Inacio Lula da Silva and his efforts to improve living standards ahead of a period of slower growth.

—With help from Lisa Du, William Horobin, Sam Kim, Cynthia Li, Ruth Liao, Yoshiaki Nohara, Andrew Rosati, Zoe Schneeweiss, Alexander Weber, and Sonja Wind.

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