US Payrolls: Just another brick in the wall - SocGen

Kit Juckes, Research Analyst at Societe Generale, suggests that if you’re looking for an excuse to explain the softness of the US May employment data, your best bet is ‘it was just one month’.

Key Quotes

“The entrails of the data point to broad-based softness. Employment slowed to 1.7% y/y. At least that might help the Q2 productivity data... Wage growth is still doing its thing, 2.5% for the overall series and 2.4% for non-supervisory workers. Finally the unemployment rate fell as the workforce shrank.

The start of this year saw the participation rate rise as fewer people left the labour force, but one whiff of summer and they’re off again. Or, more likely, the household survey just isn’t as credible as the establishment survey and should be treated with some disdain.

The bottom line is that the GDP is still on track for a 2%-ish Q2, but is showing signs of losing momentum. Hat-tip to Aneta Markowska who hasn’t been swayed at all by the Fed jawboning, and still looks for just one rate hike this year, in Q4. The Fed remains on data-watch but these figures are just another brick in the wall preventing rate hikes before the election.”