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National Bank of Canada analysts, Krishen Rangasamy pints out that  February’s US employment reports were mixed, with a strong household survey contrasting sharply with an awful establishment survey, adding that wage inflation heats up again, as full-time employment soars.

Key Quotes:

“Should the Federal Reserve be concerned about the state of the U.S. economy? While Q1 GDP growth is set to be weak because of the government shutdown last January, a subsequent rebound is more likely than not. More importantly, even February’s ugly NFP had a pretty side to it in the form of continued gains in temporary employment.”

“Also the Fed will be encouraged by hourly earnings which were up 3.4% on a year-on-year basis, the highest since April 2009. The increase in wage inflation comes courtesy of a tightening labour market as evidenced by the household survey’s +255K print in February which pushed the jobless rate down to 3.8%, i.e. close to multi-decade lows.”

“With the household survey’s job creation tilting towards full-time positions (which tend to be better remunerated than part-time positions), nobody should be surprised that wage inflation is heating up once again.”