Labour market strength not over yet

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the holiday edition from Interest.co.nz.</p><p>Today we lead with news the expected global recession in 2023 seems a way off yet</p><p>Although the headlines in the US are all about how many job cuts are coming, especially from Big Tech, in fact the December data did not show that as significant. First, <a href="https://omscgcinc.wpenginepowered.com/wp-content/uploads/2023/01/The-Challenger-Report-December-2022.pdf" target="_blank"><strong>the December layoff report</strong></a> said there were -43,600 cuts in December, -43% less than the 76,835 announced in November. But that is up sharply from the 19,000 cuts announced in the same month in 2021.</p><p>Second, the precursor <a href="https://adp-ri-nrip-static.adp.com/artifacts/us_ner/20230105/ADP_NATIONAL_EMPLOYMENT_REPORT_Press_Release_2022_12%20FINAL.pdf?_ga=2.75099158.584104404.1672942400-2083213627.1672942400" target="_blank"><strong>ADP Employment Report</strong></a> ahead of tomorrow's official non-farm payrolls report said private payrolls expanded +235,000 in December and well above the +150,000 expected. Large companies in the West did reduce payrolls, but that was more than made up by a hiring surge in the South. Forecasts for the December non-farm payrolls gain are currently +200,000.</p><p><a href="It%20was%20the%20lowest%20number%20since%20late%20September,%20suggesting%20the%20labor%20market%20remains%20tight%20and%20might%20contribute%20further%20to%20inflationary%20pressure" target="_blank"><strong>Initial jobless claims</strong></a> were surprisingly low last week as well. They rose for seasonal reasons, but by far less than expected. There are now 1.7 mln people on these benefits.</p><p>These strong labour market indicators are driving equity markets lower as investors realise the Fed will be emboldened to stay fully engaged in the inflation fight. High and rising payrolls are n