by A soft monthly payroll number conceals health of the US jobs market, but a Fed rate hike may not come until December. Non-farm payroll employment rose by a modest 151,000 month on month (m-o-m) in August, below consensus expectations. Moreover, the unemployment rate remained unchanged, wage increases were soft, and the average work week declined surprisingly. However, the disappointing August nonfarm payroll number followed solid numbers in June and July. Overall, job creation has been a healthy 213,000 per month on average so far in Q3. Meanwhile, the US unemployment rate remained unchanged for the third month in a row in August and at 4.9% is at the same level as in January. This rate is marginally higher than what the Fed considers is full employment (4.8%). However, the Fed has repeated many times that the unemployment rate probably underestimates the resources available in the labour market.The rest of the August nonfarm payroll report was soft. Wages rose by only 0.1% m-o-m in August and the average work week declined, surprisingly, to 34.3 hours, from a downwardly revised 34.4 hours in July. Nevertheless, aggregate weekly payrolls (a proxy for household income) grew quite solidly between Q2 and July-August.
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Bernard Lambert considers the following as important: Macroview, US nonfarm payrolls, US scenario, US unemployment, US wage growth
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A soft monthly payroll number conceals health of the US jobs market, but a Fed rate hike may not come until December.
Non-farm payroll employment rose by a modest 151,000 month on month (m-o-m) in August, below consensus expectations. Moreover, the unemployment rate remained unchanged, wage increases were soft, and the average work week declined surprisingly. However, the disappointing August nonfarm payroll number followed solid numbers in June and July. Overall, job creation has been a healthy 213,000 per month on average so far in Q3. Meanwhile, the US unemployment rate remained unchanged for the third month in a row in August and at 4.9% is at the same level as in January. This rate is marginally higher than what the Fed considers is full employment (4.8%). However, the Fed has repeated many times that the unemployment rate probably underestimates the resources available in the labour market.
The rest of the August nonfarm payroll report was soft. Wages rose by only 0.1% m-o-m in August and the average work week declined, surprisingly, to 34.3 hours, from a downwardly revised 34.4 hours in July. Nevertheless, aggregate weekly payrolls (a proxy for household income) grew quite solidly between Q2 and July-August.
All in all, although the US labour market certainly remains quite healthy, we think the mixed messages from today’s report means it is probably not solid enough to offer a green light to the Fed to hike rates as early as this month.
We are not modifying our scenario for US economic growth and monetary policy. Our forecast that US GDP will grow by 2.5% quarter on quarter annualised in Q3 remains unchanged, as do our projections for yearly average growth of 1.5% in 2016 and 2.0% in 2017. And we continue to believe that the Fed will wait until December before starting gradually to tighten monetary policy.