US JOBS numbers on Friday are likely to confirm that the fast-recovering American economy has reached the point where the Federal Reserve can finally halt its massive bond-buying stimulus.
The US economy looks to be on course for growth of about two or 2.5 per cent this year, and the Fed intends to halt its bond-buying programme in October.
Data due this week is expected to show employers hired 219,000 people in September, a bounce-back from a surprise slip in August to 142,000.
“The message from the Fed is ‘watch the data’ which is why the numbers next week will be very closely watched, maybe much more so than in recent months,” said Gennadiy Goldberg, US strategist with TD Securities.
As well as the jobs data, figures on consumer spending, manufacturing and trade are likely to show the US recovery firmly on track.
Even so, earnings have failed to respond much to the pick-up in jobs growth, something pointed out by Fed chair Janet Yellen and which could delay a first rate hike.
Goldman Sachs says that its number-crunching shows that growth in wages is becoming an increasingly reliable indicator of how much slack there is in the economy.
Noting how earnings growth lagged behind inflation in the United States, the Eurozone, Britain and Japan in the second quarter, the investment bank predicted central banks would take their time to start raising record-low interest rates with the Fed only doing so in the third quarter of next year.