US: Labour market back on track - ING

James Knightley, chief international economist at ING, suggests that the US labour market seems to be back on track with a 196,000 gain for March, above the 177,000 consensus.

Key Quotes

“Separately, wage growth slipped a little to 3.2% YoY from 3.4% but the unemployment remains close to 50-year lows at 3.8%.”

“The details on payrolls show that manufacturing employment fell 6,000 which is the first fall for this component since July 2017. Unfortunately for President Trump it doesn’t fit with his narrative that talking tough on trade and offering corporate tax cuts leads to re-shoring of jobs. Construction employment rose 16,000 while private sector services saw employment rise 170,000 and government was up 14,000. All these latter components are broadly in line with recent trends.”

“We expect payrolls growth to continue averaging 150-200,000 through the summer given reasonable economic activity.”

“The annual rate of wage growth rose from 2.6% in February last year to 3.4% in February – a ten year high. Unfortunately, wage growth disappointed in March, rising 0.1%MoM/3.2%YoY, but we view this as a temporary setback and expect it to soon resume its upward path.”

“Despite a period of financial market gloom, we remain relatively upbeat on the US’ economic prospects. The strength in the labour market will continue to underpin consumer sentiment and spending.”