TheCitiban recent rise in the US unemployment rate has pushed markets to increase expectations of a possible recession, but k analysts point out that more data will be needed and its task will be to determine whether the economy is already in recession or heading towards contraction.
In their latest memoir, Citibank emphasizes that while markets have reacted strongly to rising unemployment, the clearer picture will only emerge with upcoming economic indicators.
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Decisive economic data
According to City, next week’s reports on industrial production, retail sales and U.S. inflation will be crucial. This data is likely to show a ‘slowdown in activity’, especially as June’s figures were unexpectedly strong.
However, Citibank expects a slowdown in July, particularly in industrial production, which has been contracting for months.
Analysts noted that “weak working hours in manufacturing in the jobs report and a decline in the ISM should mean a decline in industrial production,” reflecting concerns about continued weakness in the sector.
The investment bank said the labor market remains a focal point, with initial jobless claims falling from 249,000 to 233,000.
However, Citibank warns that this metric is volatile and may be affected by the remaining seasonality, which could cause claims to fall sharply in the coming weeks.
However, they stated that the ‘rise in ongoing claims and other signs of a weak labor market’ suggests that the situation may not be purely seasonal.
Inflation data forecasts
Tn addition, Citibank expects a modest 0.18% month-on-month increase in the core CPI, which should keep the Fed’s attention focused on jobs and overall economic activity.
They add that until more specific data is available, markets may continue to show significant volatility while reassessing the state of the US economy.
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