US: Solid NFP report reinforces belief of another 50 bps rate hike on June

The US economy created 428.000 jobs for the second month in a row, near market expectations. According to analysts at Wells Fargo, the report is solid and reinforces their belief that the Federal Reserve will execute another 50 bps interest rate hike at its next meeting on June 14-15.

Key Quotes:

“Nonfarm payroll growth barreled ahead in April. Employment rose by 428K in the month, more or less in line with consensus expectations after accounting for modestly negative revisions to prior months. The labor force participation rate disappointingly fell two-tenths of a percentage point, but the decline came on the heels of a string of solid increases, and we are cautious about reading too much into today's drop. Wage growth looks to be showing some tentative signs of peaking on a year-ago basis but is still running more than double its average pace in the 2010s.”

“As workers stream back into the labor market and the Fed steps on demand, we expect wage growth to moderate ahead. While the first quarter's rise in the Employment Cost Index was a scorcher, there are other signs that wage hikes may start ease, indicated by small business compensation plans and reports from the Fed's latest Beige Book. That said, wages are unlikely to slow to a pace consistent with 2% inflation anytime soon and point to elevated labor costs keeping the Fed on its hawkish path.”

“In the near-term today's solid job report reinforces our belief that the FOMC will execute another 50 bps rate hike at its next meeting on June 14-15.”

Share: Feed news

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.