Economy Week Ahead: Eurozone GDP, BOE, ECB, U.S. Employment

Tuesday

The Institute for Supply Management’s manufacturing index is expected to show U.S. factory activity expanded at a slower pace in January than December. U.S. businesses have been hampered by shortages of materials and workers, which were only made worse by a burst of Covid-19 cases tied to the Omicron variant.

Thursday

The Bank of England in December became the first major central bank to tighten monetary policy since the start of the pandemic as it looked to tamp down inflation. The most recent readings on the economy—consumer prices rose at the fastest annual rate in nearly three decades in December, unemployment is falling and job vacancies are at a record high—increase the odds of the BOE’s raising interest rates again this week.

The European Central Bank’s outlook on inflation has been more benign than that of the BOE or Federal Reserve, and ECB officials appear unlikely to signal imminent plans to begin raising interest rates at the conclusion of their policy meeting Thursday. ECB President Christine Lagarde earlier this month said she expected that energy prices would stabilize in 2022 and that supply-chain bottlenecks would ease, leading to slower eurozone inflation.

Friday

U.S. job growth is expected to decelerate for the third consecutive month in January. In November and December, the unemployment rate fell to fresh pandemic lows while employers struggled to find workers. Wages grew briskly. An Omicron-led surge of Covid-19 cases in January—along with some renewed health restrictions and millions of workers calling in or caring for someone who was sick—likely complicated hiring plans and exacerbated labor shortages.