fxs_header_sponsor_anchor

News

US: Improving labor supply is helping ease the upward pressure on wages – Wells Fargo

The employment report released on Friday showed a gain in payrolls of 390K, above the 325K of market consensus. According to analysts at Wells Fargo, the report “lands in a sweet spot for the Fed”. They point out that while the labor market remains clearly tight and is adding to inflationary pressures, improving labor supply is helping ease the upward pressure on wages while still allowing more workers to gain employment. 

Key Quotes: 

“May's downshift in hiring to its slowest pace in more than a year still leaves payrolls rising at a robust pace. Employers topped consensus expectations with 390K new jobs. The ongoing solid pace of hiring has been fueled not only by sky-high demand but by more workers returning to the labor force. The labor force participation rate rebounded a tick in May, helping to keep the unemployment rate steady at 3.6% and wages from accelerating further.”

“Age growth has shown some signs of slowing relative to the pace seen in the second half of last year, but at a 4.5% annualized pace, earnings are still growing at a rate inconsistent with the Fed's 2% inflation target.”

“There are a few glimmers that wage growth may ease a bit more in the months ahead, with small business compensation plans sliding to a 12-month low in May and a smattering of comments within the Fed's Beige Book signaling that wage increases are leveling off or edging down. But, any relief is unlikely to bring wage inflation back toward a rate in line with the Fed's 2% inflation target anytime soon given the utterly tight state of the market. This creates the circumstances with which Federal Reserve officials are likely to be unhappy. But businesses and households are no more pleased, as business margins are squeezed and workers see wage growth that struggles to keep up with inflation.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.