2 Dec 2015
US NFP Preview - Danske Bank
FXStreet (Delhi) – Research Team at Danske Bank, suggests that the US employment growth would have to slow significantly to become a concern for Fed.
Key Quotes
“The jobs report is one of the key releases ahead of the FOMC meeting on 15-16 December, at which we expect the Fed to raise the Feds funds rate target for the first time since 2006.”
“Our models suggest jobs growth in November was around 175,000, which is below the consensus estimate of 200,000. The main explanation is that employment growth is somewhat volatile. Our trend employment growth models continue to suggest employment growth close to 200,000 per month, which is equivalent to the average employment growth so far this year. We estimate that employment growth in November was driven by private services. We estimate the unemployment rate was unchanged at 5.0%.”
“We estimate that average hourly earnings (AHE) grew 0.3% m/m in November, implying a decline in the annual growth rate from 2.5% y/y in November to 2.3% y/y in October. This is in line with the consensus view. The annual growth rate in AHE is by nature volatile, so, in our view, the decline should not be over interpreted and it is worth noting that the annual growth rate in average hourly earnings has been trending up this year. This is a sign that the Phillips curve is still well functioning. We expect wage growth to continue to trend up, as we expect the labour market to tighten further.”
Key Quotes
“The jobs report is one of the key releases ahead of the FOMC meeting on 15-16 December, at which we expect the Fed to raise the Feds funds rate target for the first time since 2006.”
“Our models suggest jobs growth in November was around 175,000, which is below the consensus estimate of 200,000. The main explanation is that employment growth is somewhat volatile. Our trend employment growth models continue to suggest employment growth close to 200,000 per month, which is equivalent to the average employment growth so far this year. We estimate that employment growth in November was driven by private services. We estimate the unemployment rate was unchanged at 5.0%.”
“We estimate that average hourly earnings (AHE) grew 0.3% m/m in November, implying a decline in the annual growth rate from 2.5% y/y in November to 2.3% y/y in October. This is in line with the consensus view. The annual growth rate in AHE is by nature volatile, so, in our view, the decline should not be over interpreted and it is worth noting that the annual growth rate in average hourly earnings has been trending up this year. This is a sign that the Phillips curve is still well functioning. We expect wage growth to continue to trend up, as we expect the labour market to tighten further.”