NFP: Softer earnings growth should allow Fed to skip at least one meeting and not raise rates in June – BMO

Economists at the Bank of Montreal discuss the Fed policy outlook following the US Nonfarm Payrolls report.

Fed will take further comfort from the gradual moderation in wage growth

The acceleration in payrolls, coupled with a recent upturn in job openings, suggests that American businesses are still aggressively hiring, likely to meet resilient consumer demand. However, the other areas of softness in this report suggest that the labour market is losing steam. 

In light of a recent downward revision to unit labour costs data, the Fed will take further comfort from the gradual moderation in wage growth. 

There's likely enough pockets of softness in this report for the FOMC to pass on raising rates at the next meeting, though another strong payrolls gain in June, coupled with another disappointing inflation report, could set the stage for a rate increase in July.