According to analysts at Deutsche Bank, what today’s US NFP report says about the trends in hiring and income growth could meaningfully impact market expectations so expect there to be just as much focus on hours and wages as the headline payrolls reading.
“In terms of expectations both our economists and the consensus peg payrolls at 160k. As a reminder, the May print was a much softer than expected 75k which dragged down the three-month trailing average to 151k. Our colleagues note that from the Fed’s perspective, the year-over-year trend in private employment is more important as this needs to outpace the trend in labor force growth in order to keep downward pressure on the unemployment rate.”
“As Cleveland Fed President Mester reminded us recently, monthly payroll gains in the 75k – 120k range would still be consistent with the underlying trend in overall output growth. As for the rest of the report, the consensus expects the unemployment rate to hold steady at 3.6%, earnings to rise +0.3% mom and hours to hold at 34.4.”
“Our economists also expect earnings to rise +0.3% which should result in a one-tenth increase in the year-over-year rate to +3.2%, however they do expect hours to tick up to 34.5. All that to look forward to at 1.30pm BST.”