US: Jobs report should be solid even if not spectacular - BBH

In view of analysts at BBH, the US jobs report should be solid even if not spectacular as the growth around the 12-month average of 186k is expected.  

Key Quotes

“We suspect that the risk is on the upside given the performance of weekly initial jobless claims, the rise in withholding tax receipts point to a strong labor market.  The unemployment rate fell from 4.8% in January to 4.4% in April.  It probably did not fall further in May.   The participation rate remains in the upper end of where it has been for the past few years (~63%).”

“Underemployment (U-6) has continued to fall.  It averaged 9.6% last year and was 9.4% at the start of the year.  It has since fallen to 8.6%.  It has not spent much time below 8% since 2001.   Earnings growth remains modest.  A 0.2% increase in May keep the year-over-year rate around 2.5%, which is the lower end of where it has been over the past 12 months.  This is consistent with the likely non-accelerating prices that will likely be signaled by the core PCE deflator and the second monthly decline in the prices paid index of the ISM manufacturing.”