Global Inflation Break Evens and US Non Farm Payrolls

 

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Job creation dipped back to 150k in August following two exceptionally strong readings. The potential for an unseasonably large rise in government employment on the back of surging property tax revenues could help push total employment growth back above trend – currently around 180k.

A sub-5% unemployment rate is consistent with full employment, according to the latest FOMC forecasts. Any movements around this depend on how many new entrants to the labour force find work immediately. Either way this is positive news, but the unemployment rate may temporarily fluctuate.

Average Hourly Earnings is key for the Fed and markets. Calendar-related quirks depressed last month’s figure. A positive wage surprise would add to the growing body of evidence that tight labour market conditions are starting to actively push up pay. Alternative Atlanta Fed measures put wage growth well above 3% now.

 

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