US Labour Market Monitor: June report likely to be stronger than in recent months
|- US jobs report for June will probably turn out somewhat better than the previous three reports.
- We expect employment rose 180,000 with the unemployment rate unchanged at 4.3% in June.
- Average hourly earnings are expected to rise 0.3% m/m, implying an annual growth rate of 2.6% y/y (up from 2.5%).
- While most labour market indicators are now stronger than during the recent upturn, the slack indicators still suggest there is some slack left in the labour market.
- With the rate hike in June, the Fed sent a clear signal to us that it is not as data dependent as it claims to be, and is biased towards a normalisation of rates. The reason is Fed Chair Yellen's faith in the Phillips curve.
- The problem is second-round effects have hit wage growth. When employees expect inflation to remain low, they can live with low wage nominal wage, as real wage growth may still be solid.
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