A generally upbeat June 2017 employment report supports the Fed’s case for additional monetary tightening, most likely in the form of balance sheet action in September followed up by a 25bp rate hike in December. Moreover, the solid pace of job growth will encourage the Fed to maintain 2018 policy projections as well. Although the unemployment rate ticked up, ongoing job growth at this pace will eventually push it back down. Weak wage growth continues to restrain the Fed from accelerating the pace of easing; the tepid pace of wage gains suggests the Fed’s estimates of full employment remain too high.
Read Jobless Claims and Economic Turning Points
Nonfarm payrolls rose by 22sk in June, above expectations. Moreover, both April and May were revised higher. The three month and twelve-month paces are just below 200k. Job growth continues to slow, but the rate of decline is very shallow:
This post was published at FinancialSense on 07/10/2017.