Slowdown in the US labor market? The dollar rate reacted with a decline

The beginning of the week on European markets was very successful, a FTSE 100 index outperformed yesterday as it caught up with gains in the rest of Europe on Monday, which was a public holiday in the UK.

US markets also had a strong session, led by Nasdaq xnumx, as yields fell amid a sharp slowdown in U.S. consumer confidence in August and a decline in job openings from 9165. up to 8827 thousand in July, the lowest level since March 2021.

Is the slowdown in the US labor market becoming a fact?

The sharp decline in available job openings in the U.S. helps increase the likelihood that Federal Reserve will be happy to keep interest rates unchanged next month if, as they say, they are data-driven and rates are currently close to tight territory.

This belief has been reflected in the sharp decline in bond yields, as well as the decline in the value of the US dollar, but it is also important to remember that the number of job vacancies is still well above pre-pandemic levels, so although the US labor market is slowing, it still has a way to go, before we can expect a significant increase in the unemployment rate.

Today's ADP jobs report will likely reflect this resilience, ahead of Friday's nonfarm payrolls report. ADP report has been much more resilient in recent months, adding 324. in July to 455 thousand in June. This resilience also appears in the context of wages, which in the private sector are more than twice as high as the main CPI index.

Nevertheless, the direction of movement in terms of the labor market suggests that job growth is slowing, with expectations that job growth will slow to 195. in August.

GDP revised upwards

We also have the latest revision of US GDP for the second quarter, which is expected to highlight the better performance of the US economy in the second quarter with a slight improvement to 2,5% from 2,4%, despite a slowdown in personal consumption from 4,2% in the first quarter to 1,6 %.

More importantly, basic PCE price index recorded a quarterly price slowdown from 4,9% in the first quarter to 3,8%.

Resilience in Q5,7 data was driven by the recovery of inventory levels that had declined in Q2,5. Private domestic investment also increased by XNUMX%, while increases in defense spending resulted in a XNUMX% increase.

Before today's US data is released, we will also have some important data from the UK on consumer lending and mortgage approvals for July and flash inflation in Germany for August.

Germany's headline inflation is expected to slow to 6,3% from 6,5% in July, but whether this will be enough for Bundesbank chief Joachim Nagel to abandon his recent hawkish stance is debatable.

Looking ahead to the European session, continued gains in the US seem to be setting us up for another positive start for markets in Europe this morning.