Some previews of the US non-farm payrolls tomorrow

Author: Justin Low | Category: News

This one courtesy of our friends from the land down under

The US labour market report will be due tomorrow at 1230 GMT. Prior report can be found here. Below are some previews:

  • NFP print 180k, unemployment rate 4.0%
  • Overall momentum in payrolls is still very strong
  • Come April, another robust gain is anticipated circa 180k
  • There is also a risk of upward revisions to the prior number
  • As we move through 2018, the pace of employment growth will slow but still likely exceed 100k, seeing the unemployment rate move lower

  • US April payrolls to expand by 200,000 after the small increase in March
  • The US participation rate and the number of "part-time work because of slack" have stopped decreasing
  • These trends suggest the labour market is tight and further falls in the unemployment rate should lead to further increases in wage costs
  • We expect the unemployment rate to return to 4.0% and average earnings to expand by 0.2% (2.7% pa)
  • Small reduction in unemployment rate to 4.0% expected and well below full employment level of 4.5 to 5.0%
  • Slight upward trend in hourly earnings expected as labour market continue to tighten

I believe the focus will still be on wages, even though the Fed has modified the inflation outlook in its statement. Wages data will provide a solid indicator as to what is driving these inflationary pressures higher and if they are permanent or transitory.

Given how bid the dollar is, expect the headline figure to also play a part in driving dollar direction in the event of a beat.

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