6 May 2016
US NFP pointed to a slowdown - Lloyds
Analysts from Lloyds Bank explained that today’s NFP was not a very weak report but considered that it might be enough to sway the Federal Reserve in the direction of delaying another rate hike.
Key Quotes:
“While this is not a very weak report it may be sluggish enough to sway the Fed in the direction of delaying another interest rate hike. So far in 2016 US economic data has been mixed with the labour market up until now remaining buoyant, while output and spending growth has decelerated.”
“The April slowdown in the labour market can be seen as a lagged reaction to the first quarter weakness in output. As such it is likely to be seen as a further reason for caution in making policy changes.”
“Before raising rates the Fed will want some reassurance that the slowdown in the labour market is temporary and that output growth is picking up.”
“Attention will now turn to next week’s retail sales, which will watched for confirmation that consumer spending accelerated in the early part of Q2.”
“There is one more labour market report before the next FOMC meeting in mid-June but it is now less likely that the Fed will have enough evidence to justify a rate hike at that meeting. We still, however, expect the Fed to raise interest rates later this year as it becomes clearer that the economy is strong and inflationary pressures are building.”
Key Quotes:
“While this is not a very weak report it may be sluggish enough to sway the Fed in the direction of delaying another interest rate hike. So far in 2016 US economic data has been mixed with the labour market up until now remaining buoyant, while output and spending growth has decelerated.”
“The April slowdown in the labour market can be seen as a lagged reaction to the first quarter weakness in output. As such it is likely to be seen as a further reason for caution in making policy changes.”
“Before raising rates the Fed will want some reassurance that the slowdown in the labour market is temporary and that output growth is picking up.”
“Attention will now turn to next week’s retail sales, which will watched for confirmation that consumer spending accelerated in the early part of Q2.”
“There is one more labour market report before the next FOMC meeting in mid-June but it is now less likely that the Fed will have enough evidence to justify a rate hike at that meeting. We still, however, expect the Fed to raise interest rates later this year as it becomes clearer that the economy is strong and inflationary pressures are building.”