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The nonfarm payrolls figures for June, released on Friday, will be the highlight of a data-rich week in the United States that will be shortened by the Fourth of July celebrations.

Analysts polled by Reuters expect another 180,000 new jobs to be created in June and forecast the unemployment rate to remain stable at 4 percent, the highest since February 2022.

A stunning 272,000 increase in new filings in May – well above expectations – provided some reassurance about economic health, but economists pointed to nuances in subsequent economic data that suggest a slowdown in growth.

“Americans continue to assume that, by and large, it’s easy to get a job,” said Yelena Shulyatyeva, chief U.S. economist at BNP Paribas. She added that growth in health care, leisure and hospitality, as well as jobs in local and state government, should support that headline number.

A figure below expectations could unsettle investors who fear the U.S. economy is losing momentum. June data showed that continuing jobless claims reached 1.84 million, the highest since November 2021 – suggesting that prospective workers are finding it difficult to find a job even as those in the workforce remain confident about their prospects.

Traders will also be watching growth in average hourly earnings and the resulting inflation signals. Data for May showing a gradual decline in core personal consumption spending – the Federal Reserve’s preferred inflation indicator – supports those hoping for a rate cut in the coming months. The wage growth rate for June is expected to fall to 3.9 percent year-on-year, hitting a new post-pandemic low.

“Historically, AHE growth in the range of 3 percent has been more consistent with inflation (in private consumption) growth of 2 percent,” Shulyatyeva added. Jennifer Hughes

How would the pound react to a landslide victory for Labour?

Markets have calmly ignored the twists and turns in the British election campaign in recent weeks. The opposition Labour Party is widely expected to enter government with a majority of seats in Parliament after Thursday’s election.

Since Prime Minister Rishi Sunak made a surprise announcement in May that elections would be held on July 4, the pound has fallen by 0.6 percent against the dollar. The decline was mainly due to the strong greenback, which gained 1 percent against a basket of six currencies over the same period.

Although British government bond prices were influenced by expectations about economic data on when the Bank of England will start cutting interest rates, they were nevertheless significantly more stable than their French counterparts in the run-up to the parliamentary elections there.

Investors say a very large Labour majority could provide some support to the pound and UK debt if it gives markets reassurance that a new government will usher in a prolonged period of stability in British politics and facilitate reform of building regulations that could boost growth.

“Compared to France, the UK election is being treated as a non-event,” said Peter Goves, head of developed market interest rate strategy at MFS International. He added that a landslide Labour victory would “bottom-line support” for the pound as it “should provide a level of stability in the UK that has arguably been lacking so far.”

National polls of voting intentions compiled by the Financial Times currently put Labour around 20 percentage points ahead of the ruling Conservatives. If the polls are broadly accurate, Labour could win around 450 of the 650 seats in the House of Commons. Mary McDougall

Will the European summer holiday season fuel inflation?

The start of the summer season is driving up prices for a wide range of services, from package holidays to hotels, threatening to delay the decline in inflation in the eurozone that many analysts expect.

The latest inflation figures for the bloc, released on Tuesday, will provide insight into the extent to which services prices are rising and whether this is offset by a decline in energy and food prices.

Economists polled by Reuters forecast a slight decline in inflation across the euro zone, from 2.6 percent in May to 2.5 percent in June.

Figures released on Friday in France, Spain and Italy suggest that downward pressure from easing energy and food inflation is slightly stronger than upward pressure from tough services prices.

Inflation fell slightly in France and Spain, but rose slightly in Italy. Excluding energy and food costs, core inflation was either unchanged or fell slightly in all three countries. George Moran, economist at Nomura, said: “The core inflation data points to slight upside risks.”

The figures should nevertheless provide some reassurance to the European Central Bank, which recently cut its key interest rate for the first time in five years while expressing concern about tough service prices.

“Overall, these publications will not worry ECB officials too much, but the stagnating disinflation in the services sector will reinforce their caution,” said Franziska Palmas of Capital Economics.

She predicted that the ECB would likely leave interest rates unchanged at its next meeting in July, but would then cut them twice by a total of half a percentage point by the end of the year. Martin Arnold