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9 Feb 2015
US labour market remains strong – Danske Bank
FXStreet (Edinburgh) - Senior Analyst at Danske bank Signe Roed-Frederiksen assessed the recent Payrolls figures, remarking the good health from the US labour market.
Key Quotes
“The January employment report was strong in almost all aspects. Private sector monthly job growth averaged 334,000 over the past three months, the best three-month streak since March 2006”.
“Average hourly earnings rebounded by 0.5% which more than reversed the odd 0.2% decline in December. Hourly earnings growth is now running at 1.5% annualised over the past three months, which is still low compared to historical standards. However, combined with the Employment Cost Index released last week, it should ease Fed worries that wage inflation will trend lower in coming months”.
“Another encouraging sign in the report was the increase in the participation rate to 62.9%, giving a significant increase in the labour force”.
“Our payrolls income proxy shows an acceleration in income growth into the start of the year, which should further support our call for strong private consumption growth early this year”.
“Overall, the combination of better wage growth and continued solid growth in employment should give the Fed more confidence the labour market is improving”.
“Given the current extremely low level of interest rates, we stick to our call that the Fed will deliver the first hike in June this year but expect the pace of hikes to be slow initially. Risks are skewed towards a later hike (July or September) as the low core inflation gives the Fed time to wait and see”.
Key Quotes
“The January employment report was strong in almost all aspects. Private sector monthly job growth averaged 334,000 over the past three months, the best three-month streak since March 2006”.
“Average hourly earnings rebounded by 0.5% which more than reversed the odd 0.2% decline in December. Hourly earnings growth is now running at 1.5% annualised over the past three months, which is still low compared to historical standards. However, combined with the Employment Cost Index released last week, it should ease Fed worries that wage inflation will trend lower in coming months”.
“Another encouraging sign in the report was the increase in the participation rate to 62.9%, giving a significant increase in the labour force”.
“Our payrolls income proxy shows an acceleration in income growth into the start of the year, which should further support our call for strong private consumption growth early this year”.
“Overall, the combination of better wage growth and continued solid growth in employment should give the Fed more confidence the labour market is improving”.
“Given the current extremely low level of interest rates, we stick to our call that the Fed will deliver the first hike in June this year but expect the pace of hikes to be slow initially. Risks are skewed towards a later hike (July or September) as the low core inflation gives the Fed time to wait and see”.