The U.S. employment report for January highlights a full week of economic data.
The Institute for Supply Management’s manufacturing index for January is expected to show U.S. factory activity continued to expand, though perhaps at a slower pace than earlier months. Separate surveys of purchasing managers at factories in Asia and Europe are likely to reflect the sector’s relative strength through the pandemic, though January figures could be weaker than earlier in the winter.
The eurozone economy likely contracted in the final quarter of the year amid rising Covid-19 cases and tighter restrictions on consumer activity. While the drop in gross domestic product probably won’t be as bad as in the spring, weakness at the end of 2020, combined with continued spread of the virus and a slow vaccine rollout, bodes ill for the opening months of 2021.
The Institute for Supply Management’s services index is expected to show that U.S. service-sector activity expanded in January despite rising Covid-19 cases and targeted restrictions. Separate surveys of purchasing managers in Asia and Europe will likely show another contraction in activity.
The Bank of England is likely to downgrade its forecast for the U.K. economy and could offer new insight on the possibility of negative interest rates as part of a broader stimulus tool kit—though no move on rates or asset purchases is expected.
U.S. employers are expected to have added jobs in January, which would be a welcome turnaround after December’s decline in payrolls. Forecasts, however, range widely, reflecting broader uncertainty while the country struggles to control the Covid-19 pandemic.
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