US: Consumer Confidence at highs, labor market tightening - AmpGFX

In the US, Conference Board Consumer confidence reading for Feb rose from 124.3 to 130.8, a high since 2000 and similarly, other measures or consumer sentiment are around their long-term highs, notes Greg Gibbs, Analyst at Amplifying Global FX Capital Pty Ltd.

Key Quotes

“The recent tick up in consumer confidence and manufacturing surveys contrasts with a tick down in Eurozone measures.  Overall momentum in Europe remains around long-term highs, but may be peaking as US momentum is picking up.”

“The labor market components in the Conference Board consumer survey point to a significant further tightening in an already, arguably, tight labor market. Jobs plentiful rose from 37.2 to 39.5, a high since 2001. Jobs Hard to Get fell from 16.3 to 14.7, a low since 2001.  The difference between these two fell to -24.7, a low since 2001.”

“Weekly jobless claims were 222K, reported last week.  The four-week moving average was 226K, around this level for the first three weeks of February, lows since 1973.”

“The data suggests the unemployment rate may fall below 4.0% as soon as the next data release. It has been steady at 4.1% since October.”

“The wages data are perhaps the most important data point as the market seeks confirmation that the labor market tightening is starting to fuel faster wage growth.”

“The higher than expected average hourly earnings data in January (+2.9%y/y) triggered a significant reaction in the markets (higher US yields, stronger USD, and weaker US equities); despite weaker than expected payrolls growth.  It arguably set off the major correction in equities, which fell in the following week to its low for the year.”

“However, the average hourly earnings data is volatile and there are mixed indicators of labor costs, so it remains to be seen if wages growth is clearly accelerating.  The Atlanta Fed’s wage growth tracker has eased recently.  However, the quarterly Employment Cost Index is showing a rising trend.”