US: Weak NFP don’t change the likely near-term policy path of Fed - SocGen

Kit Juckes, Research Analyst at Societe Generale, explains that it’s not so much the 98k monthly increase in US payrolls in the employment report which was weak (three-month average only dipped to 178k and the data are being blamed on the weather).

Key Quotes

“The annual growth of employment is now 1.52%, and while that’s still a chink above the growth of the labour force, it’s going to need some help from a late-cycle pick-up in productivity to keep the economy growing at a 2%-plus rate. As for wage growth, the 2.7%headline rate is fine, but it’s converged with the three and 12-month averages, which suggests some loss of momentum, and the older non-supervisory index slowed to 2.3%.”

“If weak productivity growth is one major feature of the US (and UK) economies at the moment, so is the inability of wage growth to pick up in the face of falling unemployment. The data won’t add urgency for the Fed’s rate cycle, though they don’t change the likely near-term policy path.”