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Saturday, 8 July 2017

US jobs power back

Jobs growth solid 

US payroll employment increased by a very solid +222,000 in June, while the results for the preceding two months were also revised up. 

Over the past three months the economy has created an average of +195,000 jobs per month. 

81 consecutive months of employment growth is now by far the longest such streak in US history, although the pace of gains has often been steady rather than sharp. 

Over the first half of 2017 employment gains averaged +178,000 per month.

The economy appears to be bringing more people back into the workforce. The unemployment rate was reported at 4.4 per cent in June. 

Despite the strong headline jobs numbers, average hourly earnings increased by only 4 cents, meaning that the annual growth in earnings missed forecasts in rising by +2.5 per cent. 

Low rate environment

Some interesting food for thought here for Australia - where the unemployment rate has improved, but still remains at 5.5 per cent, with a high level of underemployment - and where the trimmed mean and weighted median measures of inflation have been tracking below the target 2 to 3 per cent range.

The Reserve Bank of Australia clearly isn't keen to see the cash rate fall any lower, yet wages growth has been very weak in historical terms.

With pacy wages growth not appearing likely any time in the immediate future, the possible sources of stronger inflation may include higher energy costs, and more lately a return to rental price inflation in Sydney and Melbourne.