6 Mar 2015
US average earnings to rise, June hike on cards – ING
FXStreet (Barcelona) - With US labour report showing good jobs growth, James Knightley, Senior Economist at ING, explains that average earnings will pick as US firms are observing retention issues.
Key Quotes
“The US labour report for February is strong, showing payrolls growth of 295k versus 235k expected. There were some modest downward revisions to the last two months of -18k.”
“Meanwhile the unemployment rate fell to 5.5% from 5.7%, which is lower than the 5.6% consensus prediction.”
“The only disappointment was that wages growth wasn’t as firm as hoped. Wages rose just 0.1%MoM, leading the annual rate of growth to slow to 2% from 2.2%. This suggests that inflation pressures emanating from the labour Market remain weak.”
“we suspect firms will increasingly be thinking about staff retention - we are moving from an environment where firms didn’t feel the need to offer higher pay to one where it is a growing requirement to pay more in order to keep staff.”
“This should see average earnings start to rise, which will increasingly be an issue for medium term inflation risks.”
“With the economy looking in good shape and adding jobs in significant numbers we therefore still feel that a Fed June rate hike looks more likely than not.”
Key Quotes
“The US labour report for February is strong, showing payrolls growth of 295k versus 235k expected. There were some modest downward revisions to the last two months of -18k.”
“Meanwhile the unemployment rate fell to 5.5% from 5.7%, which is lower than the 5.6% consensus prediction.”
“The only disappointment was that wages growth wasn’t as firm as hoped. Wages rose just 0.1%MoM, leading the annual rate of growth to slow to 2% from 2.2%. This suggests that inflation pressures emanating from the labour Market remain weak.”
“we suspect firms will increasingly be thinking about staff retention - we are moving from an environment where firms didn’t feel the need to offer higher pay to one where it is a growing requirement to pay more in order to keep staff.”
“This should see average earnings start to rise, which will increasingly be an issue for medium term inflation risks.”
“With the economy looking in good shape and adding jobs in significant numbers we therefore still feel that a Fed June rate hike looks more likely than not.”