United States: Solid jobs data support steady Fed – Commerzbank

Commerzbank’s Dr. Christoph Balz notes that the U.S. labor market surprised to the upside in August, with Nonfarm Payrolls and private sector jobs both rising strongly while the unemployment rate held at 4.1%. Wage growth continued to slow. The bank stresses that the Federal Reserve, led by Chairman Warsh and Governor Waller, will now focus on August consumer price data for the September 15–16 policy decision, where Commerzbank still expects no rate change.

Jobs strength shifts focus to inflation

"In the U.S., the number of jobs rose by 162,000 in August. The unemployment rate remained at 4.1%, indicating that the economy continues to be at full employment. Overall, the report exceeded expectations."

"From the Federal Reserve’s perspective, however, consumer prices are likely to be more important in determining whether interest rates will be raised on September 16. August’s inflation figures will be released next Friday."

"In August, employment rose by a surprisingly strong 162,000 (consensus estimate: 55,000; Commerzbank forecast: 50,000). In addition, the figures for previous months were revised upward by a total of 55,000. For example, the number of jobs in July did not fall by 23,000 as initially reported, but rose by 21,000."

"Overall, the labor market is thus in solid shape. The trend in employment growth, measured by the six-month average, is pointing upward again. The unemployment rate is roughly at the level generally associated with full employment in the U.S."

"We continue to expect interest rates to remain unchanged, but the risk that the Fed will raise rates after all has certainly increased."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)