2 Jul 2015
US nonfarm payrolls disappoints, dampens thoughts of Fed rate lift-off – ING
FXStreet (Barcelona) - The below consensus nonfarm payrolls print at 223K along with the downward revision to May data will dampen expectations for the Fed rate hike, according to Rob Carnell, Chief International Economist at ING.
Key Quotes
“Our hopes for a confirmation of the pick-up in wages evident last month, and mirroring mounting anecdotal evidence in this direction, was also dealt a big blow, with the hourly wages growth rate dropping to 2.0%YoY on a flat monthly outcome.”
“About the only upside to this result was the fall in the unemployment rate to 5.3% (5.5% previously), brought about principally by a 437K fall in the labour force, which lowered unemployment by 375K, even though employment also fell by 56K according to this volatile survey.”
“Doves at the Fed will no doubt write off this unemployment rate fall as a quirk of the data and look to a still falling participation rate (down to 62.6% from 62.9%) as a reason to drag their feet with respect to rate policy. But the wider U-6 unemployment rate also fell from 10.8% to 10.5%, so there are some grounds for reading this more positively.”
“Overall, this cannot be regarded as a strong release, and will dampen market thoughts of Fed lift-off. But this really is dreadful, volatile data, and we think it is more likely that the payrolls data eventually swings behind other high frequency labour indicators in coming months, which are running quite strong, than the other way around.”
Key Quotes
“Our hopes for a confirmation of the pick-up in wages evident last month, and mirroring mounting anecdotal evidence in this direction, was also dealt a big blow, with the hourly wages growth rate dropping to 2.0%YoY on a flat monthly outcome.”
“About the only upside to this result was the fall in the unemployment rate to 5.3% (5.5% previously), brought about principally by a 437K fall in the labour force, which lowered unemployment by 375K, even though employment also fell by 56K according to this volatile survey.”
“Doves at the Fed will no doubt write off this unemployment rate fall as a quirk of the data and look to a still falling participation rate (down to 62.6% from 62.9%) as a reason to drag their feet with respect to rate policy. But the wider U-6 unemployment rate also fell from 10.8% to 10.5%, so there are some grounds for reading this more positively.”
“Overall, this cannot be regarded as a strong release, and will dampen market thoughts of Fed lift-off. But this really is dreadful, volatile data, and we think it is more likely that the payrolls data eventually swings behind other high frequency labour indicators in coming months, which are running quite strong, than the other way around.”