Labor pains?

Daily update

The US labor market is, rightly, a key focus. Low fear of unemployment gave US consumers the confidence to reduce savings rates. That reduction in savings rates has paid for the US consumer price increases since April, sustaining spending. The November ADP payrolls data showed labor market weakness. The ADP numbers do not necessarily have a strong relationship with reality, but the weakness increases the focus on today’s weekly initial jobless claims data.
This year’s US labor story has been of companies reluctant to hire, so initial claims may not capture all the issues (new entrants to the labor market may not be claiming benefits). The “no hire” story does not seem to be AI-related (although AI is a convenient cover story to excuse CEO’s past bad decisions). If refusing to hire reflects policy uncertainty, firms could adapt in the future.
Japan had another strong bond auction. International investors’ concerns seem to overlook that a country with three decades’ experience in managing rising debt levels might, perhaps, be quite good at financing higher debt levels.
The US suspended sanctions against China’s Ministry of State Security, prioritizing the trade truce between the two countries. This is one of several shifts in the US trade stance that has occurred since the November elections.