Summer breeze for the US labour market
After an impressive US GDP reading of 3% earlier this week, markets could’ve been forgiven to think that today’s Unemployment, Non-Farm & Average Earnings would’ve continued in a similar upward trajectory.
However, a hat-trick of missed expectations saw the dollar sell off as the US economy added the fewest jobs since the June reading as the Unemployment rate also regressed to the July reading of 4.4%. As the Fed ponders its next Interest Rate Move before the year is out, this month’s policy meeting will be weary that although economic growth and labour market is obvious, average earnings have stagnated and declined over recent months which may have knock on effects to the Fed’s Inflation target of 2.0%. Fed Chair Yellen is set to start the balance sheet ‘normalisation’ in the coming months, but with sluggish spending power in an otherwise buyout labour force, she may keep investors guessing on whether the central bank issues one more rate hike before the year is out.
Anthony Kurukgy, Senior Sales Trader, comments on US Non-farm Payrolls.