Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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NFP sees average hourly earnings spike
John J. Hardy
Global Head of Macro Strategy
The US nonfarm payrolls report for August showed a bigger than expected earnings jump, with the market focusing on the spike in average hourly earnings after a number of months of no pick-up in wage inflation. The August data showed a +0.4% month-on-month rise in the average hourly earnings data series and an annual increase of +2.9%, versus +0.2%/+2.7% expected, respectively.
That annual increase is the highest for the cycle and the highest since 2009, and FX traders are taking notice, bidding up the US dollar in kneejerk fashion in anticipation that the Federal Reserve will have no choice but to continue hiking rates at coming meetings.
The payrolls data look to be largely ignored (+200,000, so slightly more than consensus expectations but revisions of prior two months were -50,000) and the market also appears to be ignoring a rather weak Household Survey (though it has a volatile history), which saw the August unemployment rate steady at 3.9% even with a drop of 0.2% in the participation rate.
That annual increase is the highest for the cycle and the highest since 2009, and FX traders are taking notice, bidding up the US dollar in kneejerk fashion in anticipation that the Federal Reserve will have no choice but to continue hiking rates at coming meetings.
The payrolls data look to be largely ignored (+200,000, so slightly more than consensus expectations but revisions of prior two months were -50,000) and the market also appears to be ignoring a rather weak Household Survey (though it has a volatile history), which saw the August unemployment rate steady at 3.9% even with a drop of 0.2% in the participation rate.
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