Stronger payrolls intensify focus on tapering

We aren’t convinced that it will mark the start of a sustained acceleration, but the stronger gain in June payrolls will embolden those Fed officials calling for an earlier end to the Fed’s asset purchases.
Andrew Hunter Senior US Economist
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US Data Response

Industrial Production (Sep.)

The 1.3% fall in industrial production in September partly reflects a temporary hit to mining and chemicals output from Hurricane Ida and a drop in cooling demand, as the weather returned to seasonal norms. That said, most of the 0.7% drop in manufacturing output is due to worsening shortages, particularly of semiconductors, which will hold back production for some considerable time.

18 October 2021

US Economic Outlook

Whiff of stagflation gets stronger

The whiff of stagflation is getting stronger as shortages worsen, leading to surging prices and weaker real GDP growth. Shortages of goods and intermediate inputs will eventually ease, although not for at least six to 12 months. But the drop in the labour force appears to be more permanent, which suggests the pandemic could have a long-term scarring effect on potential GDP after all. We now expect GDP growth to be 2.7% in 2022 and 2.0% in 2023 and we expect CPI inflation to be around 3.0% in both years. We assume the Fed will focus on the weakness in the real economy rather than the sustained overshoot in inflation, however, and are forecasting only two interest rate hikes in 2023.

18 October 2021

US Economics Weekly

Labour force exodus shows no sign of reversing

This week brought more news that acute labour shortages and the resulting surge in wages are rapidly feeding through into the most cyclically sensitive components of the consumer price index.

15 October 2021

More from Andrew Hunter

US Economics Update

Surveys suggest labour shortages persist

In contrast to the stronger payrolls figures released last week, the latest survey data suggest that labour shortages remain acute. That supports our view that the acceleration in employment growth in June probably wasn’t a sign of things to come and suggests that wage growth is set for a further acceleration.

7 July 2021

US Data Response

Employment Report (Jun.)

The stronger 850,000 rise in non-farm payrolls in June may be a sign that some of the temporary labour shortages holding back the employment recovery are starting to ease. But with the labour force rising by just 151,000 and still more than three million below its pre-pandemic peak, we aren’t entirely convinced that this is the start of a much stronger trend.

2 July 2021

US Employment Report Preview

Shortages keep speed limit on payrolls

We estimate that non-farm payrolls increased by about 500,000 again in June, as labour supply shortages continue to roil the market.

24 June 2021
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