US: NFP growth expected to snap back toward its underlying trend - BBH

The research team at BBH expects the US Non-farm payroll to snap back toward its underlying trend, and anything above 200k at this stage of the cycle must be considered robust.  

Key Quotes

“Before the sub-100k increase in March, the six-month and 12-month averages straddled 190k.  Average weekly hours may tick up to 34.4 hours.  It has been averaging 34.4 hours for the last 12 and 24 months.  Remarkably, and with little fanfare, the US economy has achieved what the French state struggled to do, and that is a 35 hour work week.”

“A 0.3% increase in April average hourly earnings will maintain the year-over-year pace of 2.7%, which is what it has averaged over the past six and 12 months.  The modicum of improvement is evident in comparing it to the 24 month average of 2.5%.  The Employment Cost Index was reported before the weekend, and it is thought to be the Fed's preferred measure of wage inflation.  It accelerated in Q1 to 0.8% from 0.5% in Q4 16.  It is the fastest pace since the end of 2007.  The wage component of the ECI is up 2.3% year-over-year.  The Beige Book also picked up wage pressures. The trend strengthens the case for a gradual adjustment of Fed policy.”