Back
4 Jan 2016
US employment data, the focus in the first week of 2016 - Lloyds Bank
FXStreet (Córdoba) - Analysts from Lloyds Bank, noted that US labor market data (NFP employment report) will be the focus of the current week.
Key Quotes:
“US labour market statistics (Fri) will be the focus in the first week of the New Year. We are looking for nonfarm payrolls to rise by around 200k in December, in line with the market consensus, while the unemployment rate is expected to remain at 5.0%. The annual growth rate of average hourly earnings is also forecast to increase to 2.8% from 2.3%.”
“ The labour force participation rate has fallen in recent years and is currently at 62.5%, levels last seen in the 1970s. Some of the decline is likely to be cyclical and a key question is whether it picks up in the context of a sustained increase in wage growth. A rise in the participation rate would support the Federal Reserve’s aim to raise interest rates at a ‘gradual’ pace.”
“According to Atlanta Fed President Lockhart, a gradual pace would be consistent with an increase in the policy rate every other meeting, namely four quarter-point increases this year to an upper bound of 1.5% which also tallies with the latest ‘dot plot’ of FOMC members. Markets, however, are pricing in only two further quarter-point hikes in the policy rate this year to 1%. How this gap in expectations of the pace of policy tightening between FOMC members and the markets unfolds will be a key focus for 2016.”
Key Quotes:
“US labour market statistics (Fri) will be the focus in the first week of the New Year. We are looking for nonfarm payrolls to rise by around 200k in December, in line with the market consensus, while the unemployment rate is expected to remain at 5.0%. The annual growth rate of average hourly earnings is also forecast to increase to 2.8% from 2.3%.”
“ The labour force participation rate has fallen in recent years and is currently at 62.5%, levels last seen in the 1970s. Some of the decline is likely to be cyclical and a key question is whether it picks up in the context of a sustained increase in wage growth. A rise in the participation rate would support the Federal Reserve’s aim to raise interest rates at a ‘gradual’ pace.”
“According to Atlanta Fed President Lockhart, a gradual pace would be consistent with an increase in the policy rate every other meeting, namely four quarter-point increases this year to an upper bound of 1.5% which also tallies with the latest ‘dot plot’ of FOMC members. Markets, however, are pricing in only two further quarter-point hikes in the policy rate this year to 1%. How this gap in expectations of the pace of policy tightening between FOMC members and the markets unfolds will be a key focus for 2016.”