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Finally, Friday and payrolls

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  • The US employment report brings markets back to the sensible world of economics after dabbling in the less sensible world of politics. We are looking for a strong report, with a 240,000 non-farm payrolls and falling unemployment rate.
  • US employment data comes in the wake of a stronger than expected employment cost index and a rising unit labour cost figure. There is a strong suggestion in recent data that at least a subsection of the US labour market is tight, and this supports the idea that inflation will rise from current levels.
  • The Euro area has somewhat different circumstances from those of the US today (polite understatement) though maybe not that different from those of the US two or three years ago. German industrial production is due, and should reassure markets with a bounce from the distorted August data.
  • French and Spanish industrial production offer a lesson in how to train the dragon of labour cost competitiveness (France, no, Spain, yes), with French IP seen weaker on the year and Spanish IP rising modestly. Draghi protested the unity of the ECB council yesterday - who could doubt that 25 economist agree about everything all the time?

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