10 Aug 2015
US NFP: Solid report but inflation non-existent - ANZ
FXStreet (Bali) - According to the Research Team at ANZ, If hiring remains firm in August, the Fed look odds on to start hiking in September, with market pricing currently at 54%.
Key Quotes
"July saw another solid nonfarm payrolls print, with the +215k outturn and 14k of upward revisions for the prior two months within spitting distance of the median market expectation.
Details showed broad based gains, including health & education (+37k), retail (+36k) and manufacturing (+15k). The household survey measures showed a more modest 100k gain, with the unemployment rate steady at 5.3%.
The participation rate remained flat at 62.6% and the employment-population ratio was unchanged at 59.3% having shown little movement thus far this year.
Nevertheless, the labour market is strengthening, with non-farm payrolls up close to 3 million over the past 12 months, and monthly job gains averaging 235k over the past three months. The U6 measure of underemployment fell to 10.4% of the labour force, the lowest since June 2008.
But as we noted late last week, signs of a pending pick-up in US inflation have remained scant, and July wage inflation was contained, with the 0.2% rise in average hourly earnings taking annual growth to 2.1%.
If hiring remains firm in August, the Fed look odds on to start hiking in September, with the market probability of a September hike rising as high as 58% from around 50% beforehand, and is currently 54%.
But even if the Fed do hike, rates are unlikely to be moving up in a hurry given low inflation and the need to limit the potential fallout to asset prices and the wider economy.
Key Quotes
"July saw another solid nonfarm payrolls print, with the +215k outturn and 14k of upward revisions for the prior two months within spitting distance of the median market expectation.
Details showed broad based gains, including health & education (+37k), retail (+36k) and manufacturing (+15k). The household survey measures showed a more modest 100k gain, with the unemployment rate steady at 5.3%.
The participation rate remained flat at 62.6% and the employment-population ratio was unchanged at 59.3% having shown little movement thus far this year.
Nevertheless, the labour market is strengthening, with non-farm payrolls up close to 3 million over the past 12 months, and monthly job gains averaging 235k over the past three months. The U6 measure of underemployment fell to 10.4% of the labour force, the lowest since June 2008.
But as we noted late last week, signs of a pending pick-up in US inflation have remained scant, and July wage inflation was contained, with the 0.2% rise in average hourly earnings taking annual growth to 2.1%.
If hiring remains firm in August, the Fed look odds on to start hiking in September, with the market probability of a September hike rising as high as 58% from around 50% beforehand, and is currently 54%.
But even if the Fed do hike, rates are unlikely to be moving up in a hurry given low inflation and the need to limit the potential fallout to asset prices and the wider economy.