According to National Bank of Canada’s analyst Krishen Rangasamy, the US economy and its labor market continue to defy doomsayers. He sees the NFP data consistent with continued expansion and higher inflation pressures.
Key Quotes:
“While showing downward revisions to prior months, the establishment survey was nonetheless encouraging given overall healthy gains (+164K). Those concerned about a downturn may feel reassured by continued gains in cyclical sectors such as construction and manufacturing but also in temporary employment which is a decent leading indicator.”
“Wage inflation also picked up as hourly earnings climbed to 3.2% on a year-on-year basis. The household survey showed even more impressive job creation (+283K), allowing the jobless rate to remain unchanged at 3.7% (i.e. close to 50-year lows) despite an uptick in the participation rate.”
“This morning’s jobs reports are consistent with continued expansion and higher inflation pressures. While that validates the Federal Reserve’s current stance of being careful with rate cuts, the escalating trade war between the U.S. and China could force the FOMC’s hand into being more aggressive than it would have liked.”
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