How the U.S. Jobs Market Is Faring; Australia's Central Bank Holds Rates Steady; China's Debt Woes

How the U.S. Jobs Market Is Faring; Australia's Central Bank Holds Rates Steady; China's Debt Woes By James Christie

Good day. Hiring in the U.S. eased this year as the Federal Reserve lifted interest rates to a 22-year high in the summer to combat inflation, potentially signaling economic growth could ease next year. Today, the job openings and labor turnover survey for October will be released and we have a look below on how the U.S. labor market is doing as 2023 draws to a close. Elsewhere, the Reserve Bank of Australia kept interest rates unchanged, a top European Central Bank official declined to rule out rate cuts next year, and Moody's cut China's credit outlook on rising debt risks.

Now on to today's news and analysis.

Top News Signs of a Weakening Job Market, in 5 Charts

The hot labor market that underpinned a surprisingly strong economy this year is showing signs of cooling , an indication that growth could ease in 2024.

The unemployment rate has edged higher this year, Americans are taking longer to find new jobs and wage growth is slowing. New Labor Department data on job openings, to be released Tuesday, and Friday's November jobs report could provide additional clues about if the historically tight labor market is starting to loosen.

RBA Keeps Rates on Hold but Keeps Watch on Incoming Data

Australia's official cash rate was left on hold at 4.35% , as expected by economists. "Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable time frame will depend upon the data and the evolving assessment of risks," RBA Gov. Michele Bullock said.

U.S. Economy For Labor Unions, 2023 Was the Year of the Strike-and Big Victories

According to Cornell ILR's Labor Action Tracker, as of Oct. 31, there were 354 strikes in 2023 involving roughly 492,000 workers-nearly eight times the number of workers involved in strikes for the same period in 2021.

Who Got a Lot Richer and Who Didn't During the Pandemic

The wealth of white and Asian households increased the most in total dollars between 2019 and 2021, while for many Black and Hispanic families the boost wasn't enough to lift them fully out of debt.

Key Developments Around the World China's Colossal Hidden-Debt Problem Is Coming to a Head

China is trying to defuse a financial time bomb that could severely damage its banking system. Cities and provinces have accumulated a massive amount of hidden debt following years of unchecked borrowing and spending.

Moody's Cuts China Credit Outlook to Negative on Growing Debt Risks ECB's Schnabel Doesn't Rule Out Interest-Rate Cuts Next Year

The European Central Bank's Isabel Schnabel declined to rule out interest-rate cuts next year in an interview published Tuesday. In the interview with Reuters whose transcript was posted on the ECB site , Schnabel called the prospect of another hike "rather unlikely" though she didn't outright say cuts were coming. ( MarketWatch )

El Salvador's Bitcoin Investments Turn Profit, President Says

El Salvador President Nayib Bukele said Monday that his country's bitcoin purchases were finally in the black , in a tweet that came shortly after bitcoin climbed above $40,000 for the first time in more than a year.

Carbon Trading Opens Loophole in Paris Climate Accord

At the COP28 climate summit under way in Dubai, negotiators are debating how much scrutiny carbon trading should face from U.N. experts and the public to prevent the mechanism from becoming a loophole in the Paris accord.

Financial Regulation Roundup SEC, FASB Take Closer Look at Companies' Statement of Cash Flows

U.S. regulators and standard setters are taking a closer look at cash-flow statements, particularly how such corporate disclosures may lag behind other financial statements in terms of usefulness for investors and quality of information .

The IRS Froze a Big Tax Credit. It Didn't Stop the Money From Flowing.

Credit funds, small business lenders and ERC processing firms are offering bridge loans and cash advances to small businesses waiting for refunds, financing boosted after the IRS put a moratorium on the ERC program in September.

Forward Guidance Tuesday (all times ET)

10 a.m.: ISM Report on Business Services PMI for November; U.S. Job Openings and Labor Turnover Survey (JOLTs) for October

3 p.m.: Fed's Bowman speaks at Aspen Institute "Charting a Course Towards a More Inclusive Financial System" event in Washington, D.C.

Wednesday

5:30 a.m.: Bank of England Financial Stability Report for December

8:15 a.m.: ADP National Employment Report for November

8:30 a.m.: Canada trade report for October; U.S. trade report for October; U.S. productivity and costs for third quarter, revised

10 a.m.: Bank of Canada interest rate decision

Research Oil Prices Could Disrupt Soft Landing for U.S. Economy

Energy prices are a wild card in the U.S. economic outlook, says Phillip Nelson, director asset allocation at NEPC. His base-case scenario calls for an economic slowdown in coming months, paired with declining inflation, allowing the Federal Reserve to gradually reduce interest rates. But a spike in oil prices, possibly triggered by a flare-up of geopolitical tensions, could create "another challenging dynamic," with higher inflation and weaker economy, he says. Nelson adds that the upcoming presidential election is likely to have a "minor influence" on NEPC's outlook. "I think whether it's looking at President Biden or Mr. Trump, we know what their policies are," he says.

-Paulo Trevisani

Commentary Worrying About Pandemics Is So 2020. Should It Be?

Amid all the concerns about inflation, interest rates and wars this year, at least investors haven't needed to worry about pandemics, but maybe they should because the risks haven't gone away , Jon Sindreu writes.

Pressure Is Building in China's Financial Plumbing

China finds itself balancing enormous new government obligations against highly leveraged nonbank financial institutions, some probably still with significant exposure to a teetering real-estate sector, Nathaniel Taplin writes.

China Evergrande Avoids a Debt Disaster-for Now Basis Points Orders for U.S. manufactured goods fell 3.6% in October , pulled down by the transportation sector, the Commerce Department said. MarketWatch) Moody's Investor Service issued a negative outlook for global banks in 2024 as financial firms face tighter central bank monetary policies, lower economic growth and greater asset risk. (MarketWatch) A private gauge of China's services activities rose to a three-month high in November, contrasting with an official index that tumbled into contraction. The Caixin services purchasing managers index climbed to 51.5 in November from 50.4 in October, Caixin Media Co. and S&P Global said. (Dow Jones Newswires) Retail sales growth in the U.K. remained weak in November despite a boost from Black Friday, with the cost-of-living crisis continuing to squeeze household budgets, according to the latest British Retail Consortium data. French industrial production sank again in October, defying expectations for a slight rebound and adding to signs of a cooldown across the eurozone. Germany's adjusted trade surplus widened in October to 17.8 billion euros ($19.37 billion) from EUR16.7 billion in September, according to federal statistics agency Destatis. Imports decreased by 1.2% from September, while exports fell by 0.2%, marking a fourth straight month of decline. (DJN) Fixed investment in Mexico fell 1.5% seasonally adjusted in September from August, its first decline in 15 months as investment in infrastructure projects fell after seven straight months of gains, statistics institute Inegi said. (DJN) Turkish price increases picked up pace again in November, a sign the country's central bank might have to keep tightening monetary policy as it struggles to tame soaring inflation. Turkey's consumer-price index stood at 61.98%, rising from 61.36% in October. November's increase marks a return to a trend of rising inflation after a decrease in October, though the rate remains below the peaks of more than 80% reached in autumn last year. (DJN) Feedback Loop

This newsletter is compiled by James Christie in San Francisco.

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

12-05-23 0715ET