Good day. The U.S. labor market has been on a tear since the economy bounced back from the pandemic, with employers adding 5.6 million jobs since the start of 2022 alone. But recent banking-industry turmoil has added economic risk and raises the question: Is the long-resilient labor market about to slip? Meanwhile, India’s central bank this morning unexpectedly kept its policy rate unchanged, as uncertainty grows over the global economic outlook amid recent turbulence in the global banking sector. This follows a similar move by the Reserve Bank of Australia earlier this week, which announced a pause in its aggressive campaign of rate hikes. And the World Trade Organization said yesterday that the war in Ukraine and stubborn inflation world-wide are expected to hold back growth in global trade this year, restraining the pace of economic recovery even as the world emerges from the height of the pandemic.

Despite a wave of layoffs in technology and finance, many employers have kept hiring through the highest inflation in 40 years and the fastest pace of interest-rate increases since the 1980s.

The Labor Department will release its March jobs report on Friday, coming on the heels of surprisingly robust job growth in January and February. Broad-based job figures are an important economic gauge but can lag behind other labor-market indicators. Here are signals to track for early clues on shifts in labor-market momentum.

• Stocks Haven’t Looked This Unattractive Since 2007

8:30 a.m.: U.S. weekly jobless claims; Canada labor force survey for March
10 a.m.: St. Louis Fed’s Bullard speaks at Arkansas State Bank Department’s Day with the Commissioner

8:30 a.m.: U.S. employment report for March
3 p.m.: U.S. consumer credit

Underlying price pressures in Canada remain well above the 2% midpoint of the Bank of Canada’s inflation target range, but Capital Economics economist Stephen Brown sees reasons to expect disinflationary forces to build. He forecasts that Canada’s consumer-price index, excluding food and energy, will ease to 2% at the end of 2023, though the central bank’s preferred trim and median measures probably won’t reach 2% until mid-2024. That won’t prevent the central bank from starting to cut interest rates in October, Mr. Brown says.

—Robb Stewart

Investors are focused on growing risks in the commercial real-estate market and the potential spillover to banking and the economy, UBS strategists write in a note. The strategists write that a growing share of CRE loans are serviced by regional and local banks, raising concerns that lending could become increasingly restrictive if regulations around these banks tighten. UBS also says there are worries about the level of outstanding CRE debt and how it will be refinanced—with about $5.4 trillion in CRE debt outstanding and $1.2 trillion due to mature this year and in 2024, excluding multifamily CRE. Higher financing costs add to existing challenges around servicing debt, especially in the office market and certain retail segments where postpandemic behavior is squeezing cash flows, according to the strategists.

—Patrick Sheridan

• Hiring by U.S. private-sector employers lost momentum in March, according to the ADP National Employment Report. It said nonfarm, private-sector employment increased by 145,000 jobs in March, easing from a 261,000 gain in February. Economists polled by The Wall Street Journal expected a gain of 210,000 jobs. (Dow Jones Newswires)
• U.S. service sector activity expanded less than expected in March and at a cooler pace than in February, on indications that new orders have eased and the labor market cooled. The Institute for Supply Management said its services activity index fell from 55.1 in February to 51.2. Economists polled by The Wall Street Journal expected a reading of 54.3. (DJN)
• New orders at German factories rose markedly in February, posting their third increase in as many months, as demand for manufacturers recovered somewhat after a significant downward trend for most of 2022. Orders increased 4.8% on month after rising by a revised 0.5% in January, according to price-adjusted data from statistics office Destatis. (DJN)
• The U.K. housing market is on track for 500,000 home sales in the first half of 2023, with market conditions at the end of the first quarter of the year better than many had expected, according to new research from Zoopla. A boost in supply is supporting sales activity, as there were 65% more homes for sale in March compared with a year earlier, and there have been more sales in the cheaper price bands. (DJN)
• Canada’s merchandise-trade surplus with the rest of the world sharply narrowed in February with a drop in exports and imports following strong rises in the first month of the year. Statistics Canada said February’s goods-trade surplus came in at 422 million Canadian dollars, the equivalent of about US$313.9 million. January’s surplus was revised down by about C$716 million, to C$1.20 billion. (DJN)

This newsletter is compiled by Perry Cleveland-Peck in Barcelona and James Christie in San Francisco.

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