US: Payrolls take a backseat to wage growth – SocGen

Omair Sharif, Research Analyst at Societe Generale, notes that the US October employment report indicated that payrolls increased by 161,000, in line with expectations.

Key Quotes

“However, this is one instance where the headline took a backseat to the underlying details, which painted a picture of a strengthening labor market.

In our view, the underlying strength in today’s report nudges the Fed closer to a rate hike in December. In the November FOMC statement, the Fed indicated that it wanted to wait for “some” further evidence of progress towards its dual mandate. This report shows that wages are finally moving higher, more workers are prepared to leave their current positions due to increased confidence in finding a better job with better pay, job growth, on average, remains above the range most officials believe is needed to keep the unemployment rate steady, the breadth of jobs gains is solid, and the headline figure may in fact have been held down by the weather. The October report clearly signals further progress on the labor market and will keep the Fed’s finger on the trigger for December.”