US Labour Market is likely to see healthy job gains despite weaker GDP growth. Wage inflation is still subdued and is expected to see a pick-up soon, as the labour market improvement advances.At the March FOMC meeting, Fed chair Yellen downplayed the importance of higher wage inflation, saying that it is not a pre-condition for raising the Fed funds rate. Nevertheless, markets are likely to pay close attention to the average hourly earnings component in the employment report. “Our expectation for non-farm payroll for March is 230,000, which is slightly below consensus. This is a somewhat weaker pace of job growth than over the previous six months, but if sustained in coming months it is clearly enough to continue to push the unemployment rate lower. For March, however, we estimate that the unemployment rate held steady at 5.5% after dropping two notches in February. We expect the Fed s long-term neutral rate of 5.0-5.2% to be reached in H2 this year.” – notes Danske Bank in a report on Friday
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