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Ugly headline non-farm payrolls number
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Wage growth accelerated in August
The NFP report for August turned out to be a huge disappointment. The headline non-farm payrolls came in at just 235k, well below the consensus estimate and even below the most pessimistic forecast of 400k by TD Securities. The print was the weakest since January. Source: Bloomberg
The leisure and hospitality sectors experienced the biggest surprise as the employment in this industry remained unchanged. Meanwhile, employment in leisure and hospitality was increasing by an average of 350k per month over the prior 6 months! It is said that the deceleration in hiring likely reflects both fears about the Delta variant and difficulties filing vacant positions. This may change in the upcoming weeks once federal unemployment benefits expire (programmes are set on expire on Monday).
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Open account Try demo Download mobile app Download mobile appThe total number of US employees on nonfarm payrolls is still well below pre-pandemic levels. More specifically, it is down by 5.3 million, or 3.5 percent. Source: Bloomberg
US labour force participation remains relatively unchanged in recent months. The scale of the recovery is still not enough. One might get the impression that expiring unemployment benefits are essential for the US labour market to recover as… many Americans are unwilling to return to work. Source: Bloomberg
Meanwhile, wages are still rising rapidly, which contributes to increasing inflationary pressures. Wage growth accelerated to 4.3% YoY (vs expected 4.0% YoY) after a print of 4.1% YoY in July. It seems that this results from lack of supply of workers. The situation will certainly be interesting in the autumn - will wages rise even further? Such scenario is possible even despite the fact that the participation rate should theoretically rise (due to expiring unemployment benefits). One has to keep in mind that the global economy still faces some serious threats, including supply disruptions, which may eventually have an impact on inflation (and wages after all!)
US labour fund in the private sectors is rising steadily. Source: Macrobond, XTB Research
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