Monday, November 9, 2015

US non-farm payrolls, Fed speakers all lead towards December lift-off - ANZ

FXStreet (Delhi) – Research Team at ANZ, suggests that the strong US non-farm payrolls data and the recent hawkish statements from the Fed speakers, all point towards the rate hike which might be coming as early as December.

Key Quotes

“US non-farm payrolls gained 271k (mkt: 185k) in October, with the previous two months revised upwards by a cumulative 12k. The gains were broadly based across industries, with education & health (+57k), retail (+44k), hospitality (+41k) and construction (+31k) recording the strongest gains.”

“Meanwhile, the unemployment rate declined 0.1ppt to 5.0% – in line with market expectations. The underemployment rate also declined further (to 9.8%) and is 1.7ppts lower than 12 months ago. Encouragingly, average hourly earnings rose 0.4% m/m (mkt: 0.2% m/m) lifting the annual pace of growth to 2.5% from 2.2%.”

“Overall, these data highlight that conditions in the labour market are picking up and satisfies the Fed’s criteria of “some further improvement in the labour market” for lifting the Fed funds rate.”

“In remarks prepared prior to the release of the October labour market data, St Louis Fed President Bullard noted that conditions in the labour market had “largely normalised” and that a range of indicators were above “historical norms.” He also added that jobs growth of 130k a month would be sufficient to keep the employment to population ratio stable.”

“Subsequent to the figures, San Francisco Fed President Williams stated that “To my mind, the [October] decision was a close call, in part reflecting the crosscurrents we’re navigating”. “On one hand, the US economy continues to grow and is closing in on full employment. On the other, in large part due to developments abroad, inflation has remained lower than we’d like.”
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