U.S. job growth seen accelerating in January, wages strong
U.S. job growth likely accelerated in January, with wages expected to have increased steadily, suggesting a strong start for the Trump administration as it seeks to boost the economy and employment. Nonfarm payrolls probably increased by 175,000 jobs last month, in part as warm weather bolstered hiring in the construction sector, according to a Reuters survey of economists. That would be a pick-up from the 156,000 jobs created in December. President Donald Trump vowed during last year’s election campaign to deliver 4 percent annual gross domestic product growth, largely on the back of a plan to cut taxes, reduce regulations, increase infrastructure spending and renegotiate deals in the United States’ favor. Although details on the policy proposals remain sketchy, consumer and business confidence have surged in the wake of Trump’s election victory last November. But with the economy near full employment, some economists are skeptical of the 4 percent growth pledge. Annual GDP growth has not exceeded 2.6 percent since the 2007-08 recession.
Rising costs lurk behind brighter European corporate results
The rising cost of raw materials is likely to be risk for European firms, Goldman Sachs said, adding that the impact of inflation and companies’ pricing power were key themes emerging from the ongoing results season. Rising commodity prices have fuelled increased inflation expectations in Europe, and sparked the so-called "reflation" trade since last summer as investors rushed into shares of banks, industrials and resources firms. However, higher prices for raw materials compounded by weaker currencies like sterling mean that for those companies unable to pass on costs to customers, profit margins are likely to come under pressure. Overall, fourth quarter earnings in Europe are expected to rise 12.3 percent, according to Thomson Reuters data while sales are seen rising only 1.7 percent, underscoring the investor focus on profit margins.
China cbank injects $93 bln in SLF, MLF loans in Jan, down 26 pct from Dec
China’s central bank injected 638.68 billion yuan ($92.98 billion) via short- and medium-term liquidity tools in January, down 26 percent from the previous month, data showed on Friday, signalling an effort to cool down rapid credit growth. The reduced injections coincided with the central bank’s move to push up some lending rates, in a further sign that it is moving to monetary policy tightening as the economy stabilises. The People’s Bank of China (PBOC) said in a statement on its website that it lent 551 billion yuan to financial institutions via its medium-term lending facility (MLF) in January. In late January, the PBOC raised rates on its MLF loans for the first time since it debuted the liquidity tool in 2014. It also was the first time it has raised one of its policy interest rates since July 2011. Outstanding MLF loans totalled 3.573 trillion yuan at the end of January, compared with 3.457 trillion yuan at the end of December, implying a net injection of 115.5 billion yuan.