US: Can non-farm add some volatility? - ANZ

Research Team at ANZ, suggests that while the US manufacturing ISM did undershoot expectations, it is worth remembering that the Fed hiked last year when the ISM manufacturing was at 48.0 and had been sub-50 for three consecutive months.

Key Quotes

“Thus there is potential for markets to whipsaw should we see a robust US jobs data tonight. The consensus is for a rise in non-farm payrolls of 180k following July’s 255k. The unemployment rate is expected to edge down slightly to 4.8%, as is average hourly earnings growth to 2.5% y/y (from 2.6% in July).

A stronger US labour market isn’t necessarily new ‘news’ for the Fed or its watchers, as it has been pretty solid for some years now. The worry for some Fed officials remains an absence of a generalised pickup in inflation. Thus a relatively large outturn relative to expectations, along with more evidence of a pickup in wages, is probably needed to get the market thinking of a near-term hike from the Fed.”