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11 May 2015
US labour market continues to tighten but earnings growth subdued – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, reviews the US jobs data release and further notes that the data was enough to cause USD to strengthen in the near-term but isn’t strong enough to bring a mid-year rate hike in the picture.
Key Quotes
“The US dollar has strengthened modestly in the Asian trading session in part supported by the release on Friday of the latest non-farm payrolls report. The report revealed that employment growth rebounded by 223k in April following a downwardly revised expansion of just 85k in March.”
“The rebound in employment growth which brought it back into line with its average over the last two years provides reassurance that the sharp slowdown in March was likely temporary.”
“A resumption of solid employment growth will keep downward pressure on the unemployment rate which declined by a further 0.1 percentage point to 5.4% in April.”
“However, there is still little evidence in the non-farm payroll report that tightening labour market conditions are resulting in higher wage growth. The annual rate of average hourly earnings growth continues to remain subdued expanding by 2.2% in April. It stands in contrast to the acceleration in wage growth over the last year evident in the Employment Cost Index.”
“Overall, the payrolls report is likely to support the Fed taking another small step towards tightening monetary policy but is not strong enough to prompt the market to materially bring forward first rate hike expectations from the end of this year.”
“As a result the non-farm payrolls report is helping to support the US dollar in the near-term with the dollar index beginning to find support at around the 95.00-level but is unlikely on its own to trigger a resumption of the US dollar’s upward trend.”
Key Quotes
“The US dollar has strengthened modestly in the Asian trading session in part supported by the release on Friday of the latest non-farm payrolls report. The report revealed that employment growth rebounded by 223k in April following a downwardly revised expansion of just 85k in March.”
“The rebound in employment growth which brought it back into line with its average over the last two years provides reassurance that the sharp slowdown in March was likely temporary.”
“A resumption of solid employment growth will keep downward pressure on the unemployment rate which declined by a further 0.1 percentage point to 5.4% in April.”
“However, there is still little evidence in the non-farm payroll report that tightening labour market conditions are resulting in higher wage growth. The annual rate of average hourly earnings growth continues to remain subdued expanding by 2.2% in April. It stands in contrast to the acceleration in wage growth over the last year evident in the Employment Cost Index.”
“Overall, the payrolls report is likely to support the Fed taking another small step towards tightening monetary policy but is not strong enough to prompt the market to materially bring forward first rate hike expectations from the end of this year.”
“As a result the non-farm payrolls report is helping to support the US dollar in the near-term with the dollar index beginning to find support at around the 95.00-level but is unlikely on its own to trigger a resumption of the US dollar’s upward trend.”