According to Krishen Rangasamy, analyst at National Bank Financial, a likely slowdown of U.S. GDP growth in Q2 and May’s below-consensus non-farm payrolls are fueling investor concerns.
“But a deceleration should not be surprising after Q1’s unsustainable 3.1% GDP growth print, while May’s slowdown in employment creation seems to be temporary.”
“Small businesses are keen to increase employment and wages amid labour shortages. Interestingly 30% of NFIB respondents, the highest share this year, thinks that now is a good time to expand ─ that measure is highly positively correlated with the fed funds rate. All told, the market’s call for looser monetary policy is not consistent with latest data from small businesses.”
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