6 May 2016
US: A neutral NFP report - ING
According to James Smith and Viraj Patel, economists at ING, the US official employment report presented a mixed picture and is it unlikely to change too many minds on the FOMC.
Key Quotes:
“As an aggregate, the labour report was probably best described as a fairly neutral and crucially, is unlikely to change too many minds on the FOMC about the timing of the next rate hike.”
“If we were to start seeing a more rapid, sustained downtrend in employment growth over the next few months, this may provide evidence that weakness emanating from the business investment side of the economy, which tends to lead the economic cycle, is starting to filter through to the more lagging labour market – at the moment though, it is hard for either the Fed or ourselves to make any conclusions based on one month’s data.”
“Indeed, the Fed won’t be too disheartened to see ongoing signs of labour market tightness translate into higher wages. Using jobs data to gauge future (or even current) US growth might be a bit misplaced and we suspect that more telling signs will stem from key activity releases such as next week’s retail sales report (13 May).”
“We are unlikely to see enough, sustained evidence of this before June’s meeting. Instead, if we do indeed see signs of stronger activity over the next few months, and financial conditions remain stable, then we think that the Fed will feel comfortable with hiking rates in the third quarter, most likely in September.”
Key Quotes:
“As an aggregate, the labour report was probably best described as a fairly neutral and crucially, is unlikely to change too many minds on the FOMC about the timing of the next rate hike.”
“If we were to start seeing a more rapid, sustained downtrend in employment growth over the next few months, this may provide evidence that weakness emanating from the business investment side of the economy, which tends to lead the economic cycle, is starting to filter through to the more lagging labour market – at the moment though, it is hard for either the Fed or ourselves to make any conclusions based on one month’s data.”
“Indeed, the Fed won’t be too disheartened to see ongoing signs of labour market tightness translate into higher wages. Using jobs data to gauge future (or even current) US growth might be a bit misplaced and we suspect that more telling signs will stem from key activity releases such as next week’s retail sales report (13 May).”
“We are unlikely to see enough, sustained evidence of this before June’s meeting. Instead, if we do indeed see signs of stronger activity over the next few months, and financial conditions remain stable, then we think that the Fed will feel comfortable with hiking rates in the third quarter, most likely in September.”