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US NFP increase more than enough to offset the growth in the labour force – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 2, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at Danske Bank, suggests that the US Nonfarm payrolls have increased by over 200,000 per month on average so far this year, more than enough to offset the growth in the labour force.

    Key Quotes

    “This is also the main reason the unemployment rate declined from 5.7 in January to 5.0 in October, only slightly above the lower end of the Fed’s current estimate of the NAIRU range (4.9%).”

    “Although the unemployment rate is calculated using household employment and not nonfarm payrolls, the two employment figures usually follow the same trend. In other words, employment growth would have to decline significantly from its current pace for the development in the labour market to become a concern for the Fed.”

    “Based on the expected growth in the labour force, trend employment growth would have to slow by more than 50,000 per month on average just to keep the unemployment rate unchanged at its current level. If it turns out that we are too optimistic on the participation rate, employment growth would have to slow even further to keep the unemployment rate unchanged.”
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