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The US gained only  156K non-farm jobs in August, weaker than expected. Moreover, wages advanced by only 2.5% y/y, not going anywhere fast. The team at CIBC looks forward to the next events.

CIBC Strategy Research comments on today’s US August jobs report:

“One of these days, all that US job creation is going to spill over into higher wage rates, but those days aren’t here yet.  There was nothing to seeze at in 156K jobs created in August, even though that is below the recent run rate, and was accompanied by some modest downward revisions to the prior two months. But average hourly earnings bumped up a lean 0.1%, leaving the 12-month pace at 2.5%. Job gains featured a decent climb in manufacturing, with services running well below trend at +95K. The unemployment rate moved up a tick to 4.4% as the household survey reported a drop in employment.

The Fed wants to see at least a hint of inflation before resuming its rate hike path, and at least in these wage numbers, it wasn’t there. A September move to begin unwinding its bond holdings is a lock (as yields are so low anyway), but December’s rate hike now needs some steady upside in the remaining core PCE readings for 2017.

Supportive for fixed income, negative for the US$,” CIBC notes.

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