US: Labor data momentum crucial for Fed policy deliberations - AmpGFX

Greg Gibbs, Director at Amplifying Global FX Capital, expects that the US payrolls data on Friday continue to be the most crucial for Fed policy deliberations. 

Key Quotes

“The previous report in October was quite supportive of the case for raising rates.    The under-employment rate that incorporates those working part-time for economic reasons and marginally attached to the labor force ticked down to a new low since 2008, suggesting that slack in the labor market is limited.”

“There were upward revisions to August and September payrolls reports (+44K), raising the pace of payrolls growth in the last three months to 176K and for the year-to-date overall to 181K,  significantly above the 80 to 100K that most Fed members see as needed to keep the labor market steady.”

“The timing of the election on 8 November, in the same period as that for most payroll survey responders, may detract from the November payrolls measure.  On the other hand, weekly unemployment claims were at a low in over 4 decades in the same week as the election.  They were at a four-week moving average low in over 4 decades on 18-Nov.”

“Perhaps the most significant component for the October payrolls report was a rise in the annual rate of wage growth to a high since 2009 of 2.8%y/y.  The Atlanta Fed wage tracker has risen even more rapidly at 3.9%y/y.”