US: Eye on employment data - Rabobank

The market will be keeping an eye on US employment as data on non-farm payrolls, unemployment and an average hourly earnings will be released today, points out the research team at Rabobank.

Key Quotes

“Non-farm payrolls could very well be higher than the previous period (200K) given that Wednesday’s ADP employment report came in higher than expected at 235K. The Bloomberg consensus for the unemployment rate is 4% (previous period 4.1%) but, arguably, wages will be watched more closely. Since wage growth came in at 2.9% y/y last period and 2.7% the period before, the market has been looking for signs of a structural pick up in wage growth. Indeed, if wage growth picks up further and structurally, the Fed will have more confidence in hiking rates several times in 2018. However, although we agree that the labour market seems tight compared to historical levels, we don’t see clear signs of that translating into higher wages. Moreover, since the US economy is already close to the peak of the business cycle, risks to economic growth, wage growth and inflation are increasingly skewing to the downside.”