Investing.com -- U.S. inflation data will be in sharp focus in the coming week after Friday’s blowout jobs report raised the prospect that the Federal Reserve may delay interest rate cuts for longer. Big banks kick off earnings season, the European Central Bank is to meet and geopolitical risks look set to continue to support oil prices. Here’s what you need to know to start your week.

U.S. inflation data

The U.S. is to release consumer price inflation figures for March on Wednesday with economists expecting core inflation, which strips out food and fuel costs, to slow to 3.7% year-over-year from 3.8% the prior month.

Data on producer prices on Thursday is expected to point to a more moderate increase.

The inflation data comes after numbers out on Friday showed the U.S. economy added far more jobs than expected last month while wages rose at a steady rate, indicating that the pace of inflation may be slow to moderate.

The combination of strong employment data and slow progress on inflation in the last couple of months has amplified the calls among top Fed officials - including Chair Jerome Powell - to be "patient" as they approach the decision on when to cut rates.

Fed minutes, speakers

The Fed is to release the minutes of its March meeting on Wednesday where officials continued to expect three cuts for this year albeit with less conviction relative to their forecast from the end of last year.

In the wake of Friday’s jobs data money markets are now pricing in two rate cuts this year, down from three previously.

Market watchers will also get the chance to hear from New York Fed President John Williams on Thursday.

On Friday Fed Governor Michelle Bowman downplayed any urgency to cutting rates and warned that should progress on inflation stall that might even push the central bank to raise rates again.

Earnings

Quarterly reports from major banks will kick off earnings season in earnest on Friday.

Investors are counting on robust corporate profit this year to support rising valuations as the stock market has rallied to record highs.

The S&P 500 is up more than 9% year-to-date, following its strongest first-quarter performance since 2019. But the bar may be rising for stocks to keep advancing at that pace, increasing pressure on companies to deliver strong results.

Investors will also listen for companies’ views on the economy and inflation.

JPMorgan Chase (NYSE:JPM), Citigroup Inc (NYSE:C) and Wells Fargo (NYSE:WFC) all report results on Friday. Delta Air Lines (NYSE:DAL) and BlackRock (NYSE:BLK) are among other big names set to provide quarterly updates during the week.

Oil prices

Oil prices notched up a second weekly gain last week, supported by geopolitical tensions in the Middle East, concerns over tightening supply and expectations about demand growth.

Crude oil settled at its highest levels since October on Friday. U.S. crude futures rose 32 cents to $86.91 a barrel, while Brent settled up 52 cents at $91.17 a barrel.

Geopolitical tensions look set to continue to underpin oil prices as markets watch for any signs of any direct conflict between Iran, the third-largest OPEC producer, and Israel that could further tighten supplies.

"If Iran directly attacks Israel, that's never happened before," Phil Flynn, an analyst at Price Futures Group told Reuters. "It's just another geopolitical risk domino about to fall."

ECB meeting

The ECB meets on Thursday and is widely expected to hold rates steady before it embarks on a rate cutting cycle in June.

Markets see an almost 100% chance of a 25 basis-point cut in June so President Christine Lagarde’s comments will be closely watched for a green light.

A flurry of policymakers have explicitly pointed to June as the date of a first move and the latest data showed that Eurozone unexpectedly fell to 2.4% in March cementing expectations for a rate cut.

Apart from the ECB central bankers in Canada and New Zealand meet on Wednesday and in Singapore and South Korea on Friday with no rate changes expected.

(Reuters contributed reporting)

By David Milliken

LONDON (Reuters) - Starting salaries for permanent staff grew at the slowest rate in over three years last month and spending on temporary workers fell by the most since July 2020, recruiters said on Monday, adding to signs of a slowdown in Britain's job market.

March's survey from the Recruitment and Employment Confederation may help convince Bank of England policymakers that underlying pay pressures in the economy are easing sufficiently to keep inflation at its 2% target.

Official measures of pay growth have been rising at an annual rate of around 6%, roughly double the pace most BoE officials think is consistent with on-target inflation.

"The data here should support a decision by the Bank of England's Monetary Policy Committee to loosen its grip on growth in the near-term future. Pay growth has slowed significantly, and is now below the survey's long-term average for new permanent roles," REC Chief Executive Neil Carberry said.

However, the BoE has been reluctant to put too much weight on REC data in recent months, as the trends it has shown in the recruitment market have been slow to translate into lower wage growth for the broader workforce.

Last week a BoE survey of employers showed firms expected to raise pay by 4.9% over the next 12 months.

Financial markets predict the BoE will start cutting rates in June or August, with nearly 0.75 percentage points of cuts priced in for 2024.

REC said overall demand for staff fell for a fifth month in a row in March, and by almost as much as in February, when demand dropped by the most in more than three years.

Downward pressure on pay was caused by a greater supply of candidates, partly because of increased redundancies, it added.

REC's data is based on a survey of around 400 recruitment agencies between March 12 and March 22.

By David Milliken

LONDON (Reuters) - Concern among large British companies about economic uncertainty has fallen to its lowest since mid-2021 but the improved mood is not yet translating into stronger investment, a Deloitte survey showed on Monday.

Britain's economy entered a shallow recession in the second half of last year although recently published surveys have suggested there will be a modest return to growth in the first quarter of 2024.

"Uncertainties driven by Brexit, the pandemic and inflation that have clouded the business scene for much of the last eight years seem to be clearing," Deloitte chief economist Ian Stewart said.

Profit margins were forecast to rise for the first time in three years and overall optimism increased for a third quarter in a row to levels similar to those just before periods of relatively strong growth in 2010, 2014 and 2021.

Despite this, businesses were more focused on reducing costs and building up cash reserves than longer-term investment.

"Expansionary strategies, such as capital spending and bringing in new products or services, are on the backburner. Given the challenges of recent years it is perhaps unsurprising that ... a degree of caution persists," Stewart said.

Geopolitics remained the biggest worry of large companies, due to fears of increased cyber attacks or higher energy prices and a general fall in demand.

Concern about British productivity and competitiveness rose to second spot - the highest in a decade - displacing disquiet about inflation, energy prices and labour shortages.

Executives expected inflation in a year's time to fall to 2.9%, down from a prediction of 3.5% three months ago, allowing the Bank of England to cut interest rates to 4.25% from 5.25% over the next 12 months

The survey is based on responses between March 12 and March 25 from chief financial officers at 64 large British companies and subsidiaries of multinationals. The British companies have a market capitalisation of 200 billion pounds ($252 billion), equivalent to 8% of the stock market.

($1 = 0.7946 pounds)

TOKYO (Reuters) - Japanese workers' real wages fell in February for a 23rd consecutive month, data showed on Monday, suggesting higher prices kept up pressure on consumers' spending appetite.

The wage trend is among the key data the Bank of Japan examines for pay and inflation outlooks, crucial factors for the central bank to consider in deciding whether to unwind its stimulus policy further.

Inflation-adjusted real wages, a barometer of consumer purchasing power, fell 1.3% in February from a year earlier, down for 23 straight months, data from the labour ministry showed. It followed a revised decline of 1.1% in January.

The consumer inflation rate the government uses to calculate real wages, which includes fresh food prices but excludes rent or equivalent, grew 3.3%, accelerating from 2.5% in January.

But nominal pay grew at 1.8% in February on the year, for its fastest increase since last June.

"We will monitor how growth in nominal pay will develop while price gains are weighing down real wages," a ministry official said.

Japanese firms agreed to raise wages 5.24% this year, the biggest increase in 33 years, a survey by the nation's largest union group Rengo showed last week.

Regular or base salary in February grew 2.2% from a year earlier, faster than a revised figure in the previous month, the ministry said.

Special payments, which include bonuses, slipped 5.5% year-on-year after a revised 12.4% gain in January.

Last month the BOJ scrapped eight years of negative interest rates and other remnants of its unorthodox policy, in a historic shift away from its focus on reflating growth with decades of massive monetary stimulus.

Here is preliminary data for monthly incomes and number of workers in February: ----------------------------------------------------------------

Payments (amount) (yr/yr % change)

-Total cash earnings 282,265 yen ($1,865.84) +1.8

-Monthly wage 277,479 yen +2.0

-Regular pay 258,319 yen +2.2

-Overtime pay 19,160 yen -1.0

-Special payments 4,786 yen -5.5

----------------------------------------------------------------

Number of workers (million) (yr/yr % change)

Overall 50.236 +1.3

-General employees 34.821 +3.5

-Part-time employees 15.415 -3.6

----------------------------------------------------------------

The labour ministry defines "workers" as 1) those employed for more than one month at a company that employs more than five people, or 2) those employed on a daily basis or had less than a one-month contract but had worked more than 18 days during the two months before the survey was conducted, at a company that employs more than five people.

To view the full tables, see the labour ministry's website at:

($1=151.2800 yen)

GUANGZHOU (Reuters) - U.S. Treasury Secretary Janet Yellen said on Friday that the United States and China have worked on an exercise for jointly dealing with a large bank failure in either country.

"We've held technical exchanges between our sides, including an exercise on how we would jointly deal with the failure of a large bank in the U.S. or in China," Yellen said in a question and answer session at an American Chamber of Commerce event in the city of Guangzhou.

Yellen made the comment about the joint work between the two sides to model financial risks from a potential bank failure as an example of the recent cooperative work between the two countries.

By Dan Burns

(Reuters) -Hiring plans among U.S. small businesses in March were the weakest since May 2020 when pandemic shutdowns threw the economy into recession, dropping below a key threshold some economists see as a bellwether for the wider job market, a survey out on Thursday showed.

A net 11% of firms surveyed by the National Federation of Independent Business last month said they plan to create new jobs in the next three months, down from 12% in February. With the decline, the index is now below its historic average of 11.8%.

"Job creation plans are now below what would be typical in a strong growth economy," NFIB said in its report.

The NFIB report comes a day before the monthly payrolls report from the Bureau of Labor Statistics, which is expected to show 200,000 new jobs were created in March, down from the 275,000 initially reported for February and the lowest total since November.

Job growth has slowed over the last two years, averaging nearly 230,000 a month over the 12 months through February, which is down from about 350,000 a month in the year through February 2023.

The slowdown comes in the face of stiff interest rate hikes by the U.S. Federal Reserve aimed at containing inflation, but job growth nonetheless has defied expectations for it to weaken much more than it has. The monthly growth rate is still well above the 190,000 a month average over the five years prior to the pandemic.

Still, with the Fed so far reluctant to begin reversing course and start lowering interest rates, economists are on heightened watch for any indication of developing weakness in hiring, and the NFIB report is one that bears watching, they say, as it shows a reliable correlation with the BLS data with a lag of several months.

While the outlook for hiring has dimmed, current hiring has held up, with 56% of firms saying they were hiring or trying to hire workers last month, unchanged from February.

"For now, employment activity remains solid, although waning from peak levels," the report said.

The NFIB report, like a separate report from payrolls processor ADP published on Wednesday, showed firms facing greater wage pressures last month. A net 38% in last month's NFIB survey reported raising compensation, up 3 points from February, which had been the lowest reading since May 2021. A net 21% plan to raise compensation in the next three months, up 2 points from February.

By Kevin Buckland

TOKYO (Reuters) - Japan's Nikkei share average tumbled more than 2% to a three-week low on Friday, putting it on course for its worst week since December 2022 as tech shares slid on Wall Street's lead.

Investors were also cautious ahead of a key monthly U.S. jobs report due later in the day, with the outlook for when the Federal Reserve will cut interest rates becoming increasingly unclear this week.

The Nikkei was down 2.42%, or 961 points, at 38,812.24, as of the midday recess, bringing its loss for the week to 3.86%.

"The biggest factor for the Nikkei's decline is technical," said Kazuo Kamitani, an equities strategist at Nomura Securities.

The benchmark index was poised for a second weekly loss, after it rallied to an all-time high of 41,087.75 on March 22.

The 25-day moving average turned lower on Friday, and should it remain that way, "there's the risk that the Nikkei is in for another step down from here," he said.

"The 25-day moving average has a mysterious gravitational pull, and is very much in focus for the market," Kamitani added. "All of next week, stock market moves could be a bit volatile."

Chip sector shares were among the biggest drags on Friday, with Tokyo Electron dropping nearly 5% to shave 192 points from the Nikkei. Advantest erased another 78 points with a 4.7% decline.

Other notable losers included startup investor SoftBank (TYO:9984) Group, which lost 3.35%, and Uniqlo chain operator Fast Retailing, which skidded 2.5%.

Of the Nikkei's 225 components, 214 declined while only 11 advanced.

The broader Topix lost 1.81%, with a sub-index of growth shares dropping 2.05%, compared with a 1.6% slide for value stocks.

Energy shares provided the one bright spot among Nikkei sectors, climbing 0.73% after crude oil closed above $90 for the first time since last October. [O/R]

Oil refiner Inpex was the Nikkei's biggest percentage gainer with a 1.3% jump.

TOKYO (Reuters) - Japanese household spending fell 0.5% in February from a year earlier, down for a 12th straight month but better than the median market forecast for a 3.0% decline, government data showed on Friday.

When adjusted for the leap year effect of having one more calendar day on Feb. 29 compared to regular years, household spending fell 2.7% in February year-on-year, according to the government's estimate of the data.

On a seasonally adjusted, month-on-month basis, spending increased 1.4%, also better than an estimated 0.5% gain.

By Timothy Aeppel

(Reuters) - Dan Ariens laid off workers, cut shifts, and halted nearly all hiring last summer after sales slumped at his company, best known for making bright orange snow blowers and lawnmowers sold around the world. Headcount fell 20% to 1,600 people, and he doesn't see business improving until 2025.

The experience of the Ariens Company, a fourth-generation family-owned firm in Brillion, Wisconsin, shows the stark contrast between U.S. factory employment - essentially flat-lining for more than a year - and the four-year boom in the wider job market.

President Joe Biden's industrial policy, headlined by legislation passed in 2022 that sparked a surge of factory construction, is aimed at boosting semiconductors, electric vehicles and green technologies, as well as other sectors.

As the presidential campaign shifts into higher gear ahead of November's election, Biden is touring factories to tout his accomplishments, especially to voters in battleground states.

Even as construction is booming and some segments of heavy industry continue to hum, such as those that supply goods for government-funded infrastructure projects, the larger outlook for jobs in manufacturing is weak. Economists mostly attribute that to a combination of high interest rates, a slowing economy, and the end of the COVID-19 demand surge for many kinds of manufactured goods.

The Biden administration contends it's too soon to see the full fruits of its efforts. It takes about six to eight quarters for manufacturing investments to translate into factory jobs, a member of the White House Council of Economic Advisors told Reuters in an interview. And as the Federal Reserve moves to cut interest rates, which is expected later this year, more jobs will follow.

"If you look in different pockets of the country - in North Carolina or Georgia - companies are already hiring before they're breaking ground," said Elisabeth Reynolds, a Massachusetts Institute of Technology manufacturing and economic development researcher, who previously served on Biden's National Economic Council. "That's a sign of things to come."

For now, Deere (NYSE:DE) & Co, Whirlpool Corp (NYSE:WHR), 3M Co and other large producers have announced layoffs, though for the most part the reductions have been targeted rather than the recent mass cutbacks in technology.  

Many factories have opted to curb or eliminate hiring. Kondex Corp., a 280-employee producer of blades used mostly on farm machinery, not long ago was paying three times its normal pay rate to bring in workers from as far away as Georgia, putting them up in hotels near its Lomira, Wisconsin, plant.

That's long over. Kondex's President Keith Johnson said he expects attrition to cut headcount by about 5% this year without layoffs.

COMPOUNDED IMPACT 

The impact of hiring freezes and targeted cuts is compounded when they occur at multiple locations in rural areas and small towns. Deere last month said it would cut 150 workers at its sprawling campus in Ankeny, Iowa - a relatively small hit in a factory that employs about 1,700 people. Just days later Tyson Foods Inc (NYSE:TSN) said it would close a nearby pork-packing plant, leaving 1,200 workers jobless.

Manufacturing's share of U.S. employment accounted for roughly a third of all jobs after World War Two. It has been in steady decline for decades as the economy re-oriented around services and as efficiency improvements and automation meant fewer bodies were needed on production lines. More recently, U.S. manufacturers faced increased competition from China and other cheaper sources of production. 

The erosion in factory jobs had leveled off in the run-up to the COVID-19 pandemic but resumed in late 2022 after the binge in goods consumption faded.   

Since late 2022, factories have accounted on average for just over 2,000 of the nearly 250,000 jobs of all types added monthly. In February, factory work fell to a record low 8.2% of U.S. employment, a 13.8 point drop from the 1979 peak of 22%.

Data from the Institute for Supply Management this week showed manufacturing employment contracted for a sixth straight month in March, an unusually long run outside of a recession.

To be sure, manufacturing jobs and output can grow with the aid of new technologies while also becoming a smaller share of the total economy - because other parts of the economy have grown even faster.

For Jason Andringa, the chief executive of Vermeer, a Pella, Iowa, machinery maker with 4,500 employees which is still hiring, the job market comes as a relief. "We can be more selective now," he said.

JOBS ON THE HORIZON

Scott Paul, president of the Alliance for American Manufacturing, a group that promotes domestic producers, said the boom in factory construction is creating jobs for builders and those producing materials they need, including cement and steel.

"The actual factory jobs that will come from all of this are still down the road," he said, "A lot of it will be in 2025 and out."

Paul said the job picture could be worse. After the extreme labor shortages during the pandemic, many employers have been hesitant to shed workers. "There's a different philosophy in the sector compared to what they did years ago," he said.

Ariens Company, the lawnmower maker, is an example. While shrinking its headcount, for three months last year the company required workers to take one week off for every week they worked.

The company's CEO said this helped avoid further layoffs. Workers earned roughly the same as they would have gotten from unemployment insurance during this time and kept their health insurance.

Office workers and those in distribution jobs continued working full time.

As a privately owned business, Ariens Company doesn't face the same pressures to cut costs to get through a slump. The CEO acknowledged these efforts hurt profits.

Then there's the weather. Ariens said two winters of light snow in the Eastern U.S. and summer droughts added to the sales slump. "We're different in that weather affects as much, if not more than the economy," he said.

TOKYO (Reuters) - A group of Japanese firms have agreed to raise wages by 5.24% this year, the country's largest union group Rengo said on Thursday. 

The third announcement on the outcome of annual pay negotiations compared with the second survey of 5.25% and initial outcome of 5.28% last month.

The results of the closely watched pay talks are announced in several stages, starting with blue-chip firms in mid-March. 

The average growth of pay hikes tends to shrink from the initial round as an increasing number of smaller firms wrap up negotiations towards the April-June quarter. 

The next survey result is scheduled to be released on April 18.  

Prime Minister Fumio Kishida is counting on high wage growth to pull Japan out of more than two decades of deflation while Bank of Japan Governor Kazuo Ueda stresses sustained wage growth and inflation as crucial for a further pullback from massive monetary stimulus.