Group Economics
US Watch
Macro & Financial Markets Research Maritza Cabezas, +31 20 343 5618
US employers shake off winter effects
8 May 2015
The labour market has proven mostly resilient. April’s nonfarm payrolls rebounded to 223K after a downwardly revised 85K the previous month. The unemployment rate fell to 5.4% from 5.5%. This report keeps the Fed on track for a rate hike in September 2015. We do not see faster wage growth as a precondition to Fed tightening, although if this occurred, it would make the FOMC’s decision easier.
Job growth solid, as employers shake off winter effects
Labour market ready for rate hike
The April nonfarm payrolls report was solid, increasing 223K
The Federal Reserve wants to see strong hiring again as it
after a downwardly revised 85K the previous month. The
considers raising short-term interest rates. The Fed looks at a
labour market cooled a bit in the first quarter, averaging 184K.
large set of indicators to determine the health of the labour
This was, however, almost in line with the first quarter of 2014,
market. Labour demand, measured by US Job Openings is
which also suffered a short interruption in job gains during the
rising at post-recession highs. The ratio of unemployed job
harsh winter. The return of strong job creation in April suggests
seekers to job openings is at its lowest levels since November
that employers are shaking off the winter effects. The
2007. Meanwhile, jobless claims have been reporting historical
unemployment rate fell to 5.4% from 5.5%.
lows. The participation rate, however, is taking more time to reflect strength. The share of Americans looking for work
Service-providing employment strong
remains weak, but it edged up in April to 62.8% from 62.7%.
Looking at the details, professional business services added
We think that the labour market is broadly resilient.
62K up from 35K the previous month, closely followed by education and health which added 61K jobs. Construction saw
This report keeps the Fed on track for a rate hike in September
a sharp increase in hiring of 45K compared to the previous
2015. We do not see a higher participation rate or faster wage
month (-9K), this is a sign of improvement in sectors sensitive
growth as a precondition to Fed tightening, although if these
to winter weather. Meanwhile, a stronger dollar continues to
indicators improved this would make the FOMC’s decision
impact manufacturing activity. Job gains in manufacturing
easier.
related activities remained subdued at 1K after reporting no job growth the previous month.
Service-providing employment strong 000’s
Wage growth improves in April
Accomodation and food
Wage growth continued to pick up moderately, but it comes amid other signs that wage growth is picking up. In April, wage growth was up 2.2% from a year earlier, slightly higher than the annual gain of 2.1% in March. On a month-on-month basis
Manufacturing Professional services Health
wages grew 0.1%, down from 0.2% the previous month. Other measures of wage growth, including the employment cost index released last week, which is a broad measure of wage and benefit expenses rose 0.7% in the first quarter, up from 0.5% in the last quarter of 2014.
Government Construction Retail trade 0 Ave. monthly change over one year
Source: Thomson Reuters Datastream
50 ChangeMarch - April 2015.
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US employers shake off winter effects – 8 May 2015
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