US: Hiring remains robust despite indications of the economy operating beyond capacity - RBC
|Paul Ferley, economist at RBC, point out that despite signals of the of an economy operating beyond capacity, hiring remains surprisingly robust in the US, as today’s NFP shows.
Key Quotes:
“Today’s employment for August indicated a solid rebound in hiring to 201k after the smaller-than-expected 147k gain in July. Thus despite indications of the economy operating beyond capacity, and thus a shrinking pool of available workers to draw from, hiring remains surprisingly robust.”
“The drop in the broader measure of unemployment, the so-called U-6 rate, to 7.4% from 7.5% provides some evidence that solid U.S. growth is drawing more individuals back into the labour force.”
“The pace of increase in wage growth does not as yet jeopardize the Fed’s 2% inflation target. However, the risk grows as this measure continues to trend higher and is thus expected to keep the Fed tightening policy.”
“Our forecast assumes that the current fed funds range of 1.75% to 2.00% will rise a further 50 basis points by the end of this year and a further 100 basis points through 2019. The next hike is expected later this month at the September 25-26 policy-setting FOMC meeting.”
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