9 Jan 2015
US Dec labour report, something for everyone, but weak wages dominate – ING
FXStreet (Barcelona) - Rob Carnell of ING, notes that the US NFP print came in at 252k, better than consensus, but hourly earnings dropped to 1.7% from previous 1.9%, further sharing that the strong unemployment rate and payroll numbers might provide the necessary ammunition for a Fed rate hike.
Key Quotes
“There was, as is often the case, something for everyone in the latest US labour report for December. Non-farm payrolls were slightly stronger than the consensus at 252K (240K consensus) though with substantial upward revisions to the previous months’ data, it does now look as if the payrolls trend is beginning to lift a little.”
“There was, in addition, a bigger than anticipated decline in the unemployment rate, which fell 0.2pp to 5.6%, helped by a 111K bounce in the household survey of employment and a drop in labour force participation.”
“But hourly earnings were a real disappointment. Just when it looks as if the US is about to see a step up in the wages figures, not only do you get a weak figure (-0.2%mom) but large revisions to past data, and the wages growth rate has plunged back to 1.7%YoY from 1.9% (2.1% unrevised last month).”
“If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate. So we are insignificantly higher than that now. The rate of payrolls jobs growth is also lending weight to the “hikers” arguments.”
“Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer, and argue against any near-term increase in rates.”
Key Quotes
“There was, as is often the case, something for everyone in the latest US labour report for December. Non-farm payrolls were slightly stronger than the consensus at 252K (240K consensus) though with substantial upward revisions to the previous months’ data, it does now look as if the payrolls trend is beginning to lift a little.”
“There was, in addition, a bigger than anticipated decline in the unemployment rate, which fell 0.2pp to 5.6%, helped by a 111K bounce in the household survey of employment and a drop in labour force participation.”
“But hourly earnings were a real disappointment. Just when it looks as if the US is about to see a step up in the wages figures, not only do you get a weak figure (-0.2%mom) but large revisions to past data, and the wages growth rate has plunged back to 1.7%YoY from 1.9% (2.1% unrevised last month).”
“If you want to raise rates, these numbers provide the ammunition you need in terms of payrolls and the unemployment rate. Historically, the Fed always thought full employment was at about a 5.3% rate. So we are insignificantly higher than that now. The rate of payrolls jobs growth is also lending weight to the “hikers” arguments.”
“Against this, with even less wage inflation than was apparent last month, the doves can argue that the unemployment figures are biased and giving a misleading steer, and argue against any near-term increase in rates.”