8 Jun 2015
Fed expected to hike rates in September – DB
FXStreet (Barcelona) - Darren Gibbs, Chief Economist at Deutsche Bank, comments that the sturdy US payrolls data suggests the Fed might on track to begin its rate hike plan from September.
Key Quotes
“May nonfarm payrolls rose 280k, which was slightly better than our above-consensus forecast. In addition, there were 32k in upward revisions to the prior two months. Payroll gains were broad-based as service sector hiring rose 256k, while the government added 18k employees in the month.”
“While the non-farm workweek was unchanged at 34.5 hours, average hourly earnings rose 0.3%, which had the effect of raising the year-over-year growth rate to 2.3%—the highest since October 2009 (2.3%). It appears that earnings are beginning to break out to the upside, similar to the employment cost index. Fed policymakers are sure to take note of this at the June 16-17 meeting.”
“The unemployment rate rose a tenth to 5.5%, but this was due to a 0.1% increase in the labor force participation rate to 62.9%. Household employment increased 272k, while unemployment rose 125k. The U-6 unemployment rate remained unchanged at 10.8%, as was the number of part-time workers for economic reasons as a percentage of the labor force edged slightly higher (4.2%). The number of discouraged workers decreased sharply to 563k from 756k previously, and is now at its lowest level since October 2008 (484k).”
“For Fed policymakers, the sturdy payroll gain coupled with a modest upshift in average hourly earnings provides further evidence that the labor market is approaching full employment. In turn, we continue to expect the Fed to begin the process of monetary policy normalization at the September meeting.”
Key Quotes
“May nonfarm payrolls rose 280k, which was slightly better than our above-consensus forecast. In addition, there were 32k in upward revisions to the prior two months. Payroll gains were broad-based as service sector hiring rose 256k, while the government added 18k employees in the month.”
“While the non-farm workweek was unchanged at 34.5 hours, average hourly earnings rose 0.3%, which had the effect of raising the year-over-year growth rate to 2.3%—the highest since October 2009 (2.3%). It appears that earnings are beginning to break out to the upside, similar to the employment cost index. Fed policymakers are sure to take note of this at the June 16-17 meeting.”
“The unemployment rate rose a tenth to 5.5%, but this was due to a 0.1% increase in the labor force participation rate to 62.9%. Household employment increased 272k, while unemployment rose 125k. The U-6 unemployment rate remained unchanged at 10.8%, as was the number of part-time workers for economic reasons as a percentage of the labor force edged slightly higher (4.2%). The number of discouraged workers decreased sharply to 563k from 756k previously, and is now at its lowest level since October 2008 (484k).”
“For Fed policymakers, the sturdy payroll gain coupled with a modest upshift in average hourly earnings provides further evidence that the labor market is approaching full employment. In turn, we continue to expect the Fed to begin the process of monetary policy normalization at the September meeting.”