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Did US hiring expedite in November? 

Both bonds and stocks notched big gains last month as investors grew increasingly confident that the Federal Reserve will cut interest rates next year.

Friday’s jobs report will offer the latest indication of the strength of the US economy, and a advance clue about the Fed’s next moves ahead of its final meeting of the year this month.

Economists polled by Bloomberg forecast that 200,000 jobs were added in November, a reacceleration from the below-forecast figure of 150,000 in October, which helped spark the market rally of recent weeks.

The unemployment rate is expected to be unchanged at 3.9 per cent. 

The labour market has remained strong in recent months, despite interest rates that stand at the highest level in decades. But although US employers have continued to add jobs, the unemployment rate has ticked up from a low of 3.4 per cent in April.

This week, hawkish Fed governor Christopher Waller said that he believed that interest rates at current levels could in effect slow the economy and bring inflation to target. Minutes from the Fed’s November meeting also showed officials felt little urgency about raising interest rates again. In the futures market, traders are not betting on any more increases from the Fed, but instead are expecting interest rate cuts as soon as May.

While a pick-up in hiring is unlikely to push the Fed to tighten policy when it next meets in December, a strong figure could give investors betting on a series of rate cuts next year pause for thought. Kate Duguid

Will consumer spending rebound in the eurozone?

Retail sales in the eurozone have fallen for three months in a row, but that trend could be broken in October when the latest data is published on Wednesday.

Consumer confidence in the 20-country single currency bloc has steadily improved this year as inflation has eased, even though it remains below the historic average, reflecting the impact of high interest rates, falling house prices and continued economic stagnation. 

National data published in the past week gave a mixed picture for consumer spending in Europe. There was much faster growth in German retail sales of 1.1 per cent in October from the previous month, however this contrasted with bigger than forecast monthly falls of 0.9 per cent in France and 0.2 per cent in Spain.

Economists have forecast a mild rebound in the eurozone economy next year will be partly driven by growth in consumer spending as continued growth in wages overtakes slowing inflation, boosting the spending power of households. 

However, there are also signs of rising job losses in the bloc, pushing unemployment up in Germany and Italy in October, which is likely to make households even more cautious in their pre-Christmas spending.

“This dynamic, if sustained, could dent households’ confidence despite the likely boost in real disposable income that we expect as wage growth picks up and inflation falls,” said Mariano Cena, an economist at Barclays. Martin Arnold

Is Chinese trade recovering?

Investor attention in Asia will be focused on China’s trade figures on Thursday, which will disclose whether a tentative recovery in both domestic and external demand was derailed last month.

A median forecast from economists surveyed by Bloomberg points to a fall of 1.5 per cent for Chinese exports, while imports are tipped to rise 4 per cent — both heavily influenced by base effects from conditions a year ago. Those trade flows are expected to shake out to a trade balance of $48.7bn. But a mixed batch of leading indicators suggest that readings in the coming week could yet surprise markets.

New export orders reported by Chinese manufacturers fell in November, while purchasing managers’ indices for many of China’s major trading partners including the US, EU and Japan revealed ongoing contraction.

“It’s true, there is downward pressure from foreign demand as most major economies are starting to slow,” said David Chao, global market strategist for Asia ex-Japan at Invesco, although he added that “domestic demand in China has held pretty steady.”

However, analysts at Citigroup have forecast export growth of 1 per cent, largely on the back of base effects. They also point to growth in shipping costs in China and a rise for the Baltic Dry index, a proxy for global shipping activity that recently touched an 18-month high, “suggesting improvement in global trade momentum.” Hudson Lockett

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