US NFP: Underlying growth solid, but wages disappoint- Danske

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Córdoba) - Today’s jobs report, showed that the US economy created 292,000 new jobs in December. According to analysts from Danske Bank it tells that the underlying growth is solid but earning continue to disappoint.

    Key Quotes:

    “Overall, US labour market rebounded in Q4 with on average 284,000 new jobs added after the slowdown in Q4 where there was created 174,000 new jobs per month on average. In total, employment rose by 2.65 millions, which however was lower than in 2014 where employment increased by 3.12 millions. Despite the weak activity data lately, the strong labour market tells us that the underlying growth in the US is solid.”

    “However, average hourly earnings (AHE) disappointed. Although AHE increased back to 2.5% y/y in December from 2.3% y/y in November, both we and consensus had expected it to have risen by more. AHE trended slightly up in 2015 and we expect wage growth to pick up further this year as the labour market continues to tighten.”

    “Manufacturing employment is fairly stable despite the very weak manufacturing activity data in recent months. There are likely a lag between lower activity and employment but so far employment within manufacturing has not suffered significantly. This is also positive for the overall impression of the US economy.”

    “We stick to our call that Fed will hike three times this year despite the strong employment growth. Although today’s jobs report increases the probability that the next hike will be in March, we think Fed will be on hold until April.”

    “In our view, Fed’s main takeaway is that wage growth was not as strong as expected. Also the poor risk environment and the weak activity data in recent months are contributing factors.”
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