FXStreet (Delhi) – Rob Carnell, Chief International Economist at ING, notes that the US labour report was a mixed back and was not sufficiently strong enough for the Fed to proceed with its September lift-off plans. There were no signs of surge in payrolls to back up falls in the unemployment rate and rising wages.
Key Quotes
“The softest part of the survey was the payrolls headline itself. At +173K, it is clearly at the lower end of recent trends, though there were decent upwards revisions to the previous two months, adding 44K to the running total, and this August number itself is prone to substantial upward revisions, so even this is not as bad as it looks.”
“But there were soft spots too. Manufacturing payrolls fell 17K on the month. Private employment creation was only 140K, and the numbers would have been much worse without an outsize 33K rise in government employment, driven by state and local government.”
“But there was, as is so often the case, a different story coming from the household survey, which showed the unemployment rate falling by more than expected to 5.1% – the lowest since April 2008. This was, however, mainly a function of a 41K fall in the labour force, and falling labour participation.”
“On top of this, wages growth was slightly stronger, at 0.3%mom, taking the annual rate of wage inflation up to 2.2%, with a rare upward revision to the July figures, which are also shown up at 2.2% YoY now.”
“This is still pretty weak though, and the Fed may like to see confirmation with a second decent rise in wages before concluding that something positive is really happening here.”
(Market News Provided by FXstreet)