Bankinter : US non-farm job creation again beats forecasts: 339K vs 195K estimated and 294K previous (revised from 253K). The unemployment rate rebounds to 3.7% versus 3.5% estimated and 3.4% previous (a historical low). Average wages/hour decelerate (year-on-year) to +4.3% versus +4.4% estimated and previous.
Assessment: Despite mixed signals from labour market figures, the labour market remains strong. The unemployment rate increased by three tenths and the number of unemployed grew by 440k, while the active population remained practically unchanged. Non-farm employment creation grew significantly more than expected, although the total number of hours worked was lower. It fell to 34.3 from 34.4 in the previous month. This denoted more part-time jobs and in line with the rebound in the underemployment figure. On the other hand, average wages/hour decelerated by one tenth of a percentage point year-on-year.
The reading of this was positive as it brings the Fed closer to achieving its target of bringing inflation back to +2.0%. At the Fed’s meeting on June 14, the question remains open as to whether they will raise rates again by +25bp or will advocate a pause and see how the economy reacts. The latter scenario is more likely. In summary, the increase in employment is explained by greater temporary employment.
