Global Data Watch Goldilocks with wrinkles-110226288

Global Economic Research06 September 2024J P M O R G A Nwww.jpmorganmarkets.comContentsBoE’s leap of faith among European peers 15Australia: Hoarded labor creates a downside risk 19Global Economic Outlook Summary5Global Central Bank Watch7Economic Activity Tracking9Selected recent research from J.P. Morgan Economics12J.P. Morgan Market Watch13 Data Watches United States22 Focus: Focus: The payroll effects of lower immigration30 Euro area31Japan37Canada41Mexico43Brazil45Argentina48Andeans50United Kingdom52Sweden and Norway54Emerging Europe56South Africa61Australia and New Zealand63China, Hong Kong, and Taiwan65Korea69ASEAN71India75 Regional Data Calendars77Economic and Policy ResearchBruce Kasman(1-212) 834-5515bruce.c.kasman@jpmorgan.comJPMorgan Chase Bank NAJoseph Lupton(1-212) 834-5735joseph.p.lupton@jpmorgan.comJPMorgan Chase Bank NANora Szentivanyi(44-20) 7134-7544nora.szentivanyi@jpmorgan.comJ.P. Morgan Securities plcMichael S Hanson(1-212) 622-8603michael.s.hanson@jpmchase.comJPMorgan Chase Bank NAManaging EditorMalcolm Barr(44-20) 7134-8326malcolm.barr@jpmorgan.comJ.P. Morgan Securities plcGlobal Data Watch•Maintaining soft-landing call amid US labor market slowdown… •…but shifting risks support cutting cycles (Fed to start with -50bp)•Inflation moves prompt policy action in Asia (BoJ hike, cuts elsewhere)•Up next: US Aug Core CPI (0.2%), ECB (-25bp)Goldilocks with wrinklesThe news this week is clear in its message: The US expansion continues to downshift while the global expansion remains on track but imbalanced. What this means for the outlook is less clear. We are inclined to view the latest data as consistent with our soft-landing call that sees sufficient supports to keep the expansion aloft, as inflation’s return to target green-lights an easing cycle that aligns rates with mid-cycle fundamentals. In the event, global and US growth are moderating now but will pick up as rate cuts gain traction in 1H25. Unfortunately, soft landings are as hard to track as they are to forecast, as a deceleration to a soft-landing looks painfully similar to a slide into recession. Navigating this path requires a risk management approach, which is underscored by the ongoing shifts in the risk balance assessments made by central banks in their forward guidance. The US is leading the global expansion, both in terms of its robust recovery as well as the latest loss of labor market momentum. Today’s reported 118k gain in private employment is disappointing. The anticipated bounce-back from perceived July distortions did not happen. Rather, a 62k downward prevision to the prior two months reinforces the signal of a slowdown. The %6m run-rate of private employment ticked down to 1.2%ar last month and is nearing the 1% threshold typically seen around recessions (Figure 1; 1.1% given the upcoming benchmark revisions). Although the unemployment rate edged down to 4.2%, the move was just 3bp unrounded and the real-time Sahm rule actually moved up further from