There’s no doubt about it, the US economy is weathering the commodity storm well. Friday’s night’s Non Farm Payrolls (NFP) were excellent at 295k, all charts from Calculated Risk:
The unemployment rate fell to 5.5%, a full point below Australia:
The trend is strong:
The productivity measures stopped getting worse or are improving:
But there is still no sign of wage increases:
Because shadow slack in the labour market remains abundant:
Markets took the report as a signal for mid-year rate hikes. I’m unmoved on that. The Fed is not going to hike until wages increase and I would argue not until it’s a firm trend either. Fed mouthpiece John Hilsenrath agreed:
“The robust job market keeps the Federal Reserve on track to alter its guidance on interest rates at its policy meeting this month and debate whether to start raising short-term interest rates in June.
Still, there’s no guarantee the Fed will move by midyear. Officials want to see how output, employment and inflation unfold before acting. They remain concerned that inflation is running below their 2% inflation target.
At $24.78, average hourly earnings for private-sector workers rose 2% in February from a year earlier. That’s exactly in line with the modest 2% average over the past four years. “There are perhaps hints,” Ms.Yellen told the Senate Banking Committee on Feb. 24, “but we’ve not seen any significant pickup in wage growth”
We’re still looking at Q3 at the earliest, more likely Q4.
