Daybreak Weekend: US Jobs, Special European Council, Australia Eco
Feb 28, 2025
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Mary Ross Gilbert, a Senior Equity Analyst at Bloomberg Intelligence specializing in retail, shares insights on Macy's and Gap's fourth-quarter earnings and their recovery strategies amid economic uncertainties. Swati Pandey, an Asia EcoGov reporter, discusses the Australian economy's resilience, highlighting consumer behavior and labor market dynamics. They also explore potential impacts of U.S. tariffs on trade with China and the cooling inflation trends that are shaping economic policies in Australia.
The upcoming February jobs report in the US is expected to show job growth amid concerns about the impact of administration policies on employment.
Europe's political landscape is evolving with discussions on defense spending and security cooperation in light of diminishing American support due to the Ukraine conflict.
Deep dives
US Labor Market Insights
The February jobs report is anticipated to reveal an addition of approximately 158,000 jobs, up from last month's gain of 143,000. The unemployment rate is expected to remain stable at 4%, but uncertainties surrounding employment numbers due to recent administration policies create caution among economists. Analysts have noted that average hourly earnings might show a slight month-over-month drop, although they are expected to be higher year-over-year. The overall confidence in these projections is tempered by the unknown impacts of upcoming layoffs and how they will reflect in future jobless claims.
Retail Earnings Forecast
Earnings reports for Macy's and Gap are set to shed light on the holiday shopping quarter, with Macy's projected to meet revenue expectations of around $7.8 billion. Analysts predict that Macy's will slightly exceed earnings per share estimates, thanks to strong consumer transaction data. In the case of Gap, although a revenue drop of about 5.3% is expected, sales may decline only 1% to 2%, reflecting strong execution in their Old Navy line. Notably, new product launches and collaborations, like those tied to popular shows, could bolster sales and consumer interest in the Gap brand.
Economic Indicators from Australia
Australia is set to report on GDP, retail sales, and trade figures following the Reserve Bank of Australia's recent rate cut aimed at stimulating the economy amidst weak consumer sentiment. Despite previous concerns, consumers have recently begun to spend more, fueled by tax cuts and energy subsidies, particularly in larger cities like Sydney. The labor market remains strong, with unemployment hovering around historical lows, largely supported by government spending. However, the outlook on trade remains cautious, particularly with U.S. tariffs potentially impacting specific sectors despite current favorable conditions.
Shifts in European and Global Political Dynamics
The political landscape in Europe is shifting, particularly around defense spending and cooperation with the U.S., as leaders grapple with diminishing American security guarantees amid the ongoing war in Ukraine. Discussions at upcoming European council meetings will focus on increasing defense budgets and the potential issuance of joint bonds to bolster security initiatives. The relationship with the U.S. is crucial, with European leaders attempting to align more closely with President Trump's approach while addressing domestic concerns regarding spending reallocation. The complexity of navigating trade tariffs and retaliatory measures adds to the unease in transatlantic relations.