Week in review

• South Korea unemployment rate increased to 3%
• U.S. CPI and PPI rose 5.4% and 8.6% y/y, respectively
• China CPI and PPI rose 0.7% and 10.7% y/y, respectively

Week ahead

• China 3Q 2021 GDP, industrial output
• U.S. housing starts, manufacturing and services PMI
• Eurozone PMI composite

Thought of the week

The U.S. labor market is proving to be both weaker and hotter than expected. The weakness was in the headline, which showed just 194,000 nonfarm payrolls added, well below consensus expectations. This miss was mitigated by a decline in the unemployment rate from 5.2% to 4.8% and a modest increase in the average workweek. The nonfarm payrolls miss was mostly focused in the government sector, while sectors like leisure and hospitality added jobs. Labor supply issues were underscored in the payrolls data, as the labor force participation rate of 61.6% is still well below its pre-pandemic peak of 63.4%, despite the end of enhanced unemployment benefits. We believe the Federal Reserve will focus on the continued fall in the unemployment rate and the outsized gains in wages, which shows that the economy is quickly approaching full employment with still-building inflation pressures. Thus, we continue to expect them to announce a tapering plan at their November meeting.

Unemployment rate and average hourly earnings*

Percent of labor force, year-over-year change, seasonally adjusted

Source: FactSet, U.S. Bureau of Labor Statistics, J.P. Morgan Asset Management. *Average hourly earnings are calculated from the wages of production and non-supervisory workers.
Guide to the Markets – Asia. Data reflect most recently available as of 15/10/21.

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