US: Labor market conditions tightening - AmpGFX
|According to Greg Gibbs, Director at Amplifying Global FX Capital, US labor data still didn’t have a smoking gun on inflation, with wages growth and hours worked stable, but the market tightened further into levels that suggest wage growth may start to pick-up.
Key Quotes
“As such, the Fed have to remain vigilant and send signals that policy accommodation is likely to continue to be removed gradually.”
“ADP and NFP diverge
- The ADP employment report and the Government non-farm payrolls (NFP) report had moved closely together over the last year or so. However, the two reports diverged significantly in March. ADP rose 263.5K, NFP rose only 98K. ADP has exceeded NFP report for the last five months in a row. As such, the two reports are sending difference signals.
- ADP suggests employment has accelerated since around October last year, rising at its fastest three-month moving average since 2014 (+252.5K) and the fastest six-month moving average since March-2016. NFP had the lowest six-month average since 2012 (+163K).
- While still at levels that point to labor market tightening, NFP suggests that employment growth may be on a steady declining trend.
- The NFP report is more comprehensive and more recognized by the market. Revisions to the two reports may tighten their recent relationship in coming months.
- The slower growth in NFP may indicate some slowing in the economy, but it fits with the narrative that the labor market is tightening. Job growth is expected to slow as the excess supply of labor falls, reducing the capacity of employers to find suitable workers.”
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