FXStreet (Delhi) - Sean Callow, Research Analyst at Westpac, suggests that the FOMC is likely to judge that the cumulative improvement in the job market warrants the funds rate moving off zero.
Key Quotes
“Given that the FOMC’s 28 October statement made clear that a December interest rate rise would be under active consideration, the booming October jobs report has changed the conversation substantially. With markets pricing a 2/3 chance of a Dec move, there remains reasonable doubt over that meeting.”
“Not only was the 271k jump in non-farm payrolls a full 21k above even the most optimistic forecast, it was reinforced by the separate survey of households which estimates the unemployment rate.”
“The headline unemployment rate continues to trend lower, to 5.0% in Oct, a low since Apr 2008. But as our economics team notes, “the broader U6 unemployment measure, which incorporates the marginally attached (those not currently actively looking for a job but who have done so in the past year and would like to work) as well as those working part-time for economic reasons, gives a similar perspective. Over the past two years, the U6 rate has fallen from 13.7% to 9.8%.”
“This is an important perspective that goes beyond whether e.g. the Nov payrolls reading on 4 December suffers from some ‘payback’ by printing nearer, say, 150k.”
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