I am not sure what all the fuss is about. US jobs missed marginally but the details were strong. There is nothing here but encouragement for more Fed hikes. Goldman:
Nonfarm payrolls rose 209k in June, 21k below consensus and the first miss in fifteen months. Revisions were negative as well, and the three-month average pace now stands at +244k, down from +283k as previously reported. The household survey was somewhat stronger, with the unemployment rate retracing one tenth of the May increase to 3.6%, driven by a 273k gain in household employment. However, the underemployment rate surprisingly rose two tenths to 6.9%. Average hourly earnings surprised to the upside at 4.4% year-on-year (vs.4.2% expected). Our Q2 wage tracker stands at +4.9% on a year-over-year basis (vs.+5.0% in Q1) and +5.1% on a quarterly annualized basis (vs. +5.0% in Q1). We continue to expect the FOMC to hike by 25bp in July before going on hold in September.
Wage growth is too strong for a Fed focused on sticky core inflation. Year-on-year inflation comparisons are about to bottom out and rise too.
There’ll need to be a big turn in the data to stop the Fed from hiking right through H2. It needs a recession to kill labour demand.
Conversely, Australia does not have this challenge given the mass immigration labour supply shock and the RBA does not need to follow the Fed.
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