02 June 2023
If you are covering the latest US employment statistics, please find below a comment from Marcus Brookes, chief investment officer at Quilter Investors:
“The US jobs markets, in the face of challenging conditions, continues to confound expectations with more jobs added to the economy than estimated. Employment in the US has been robust and as a result the consumer is yet to buckle under the pressure of high inflation and an aggressive hiking cycle. The numbers today are likely only going to add fuel to the fire that the Federal Reserve has to raise rates once again, despite earlier this year appearing to be ready to press pause on the hikes. Clearly the interest rate rises are not feeding into the real economy as quickly as the Fed may have hoped and as a result we are seeing inflation being stickier than feared and wage increases continuing, although at a slower pace than previously.
“With the debt ceiling talks seemingly concluded and a technical default avoided, markets will once again the honing in on these data sets and potentially not like what it is seeing. The unemployment rate may have ticked up but the number of jobs being added is still above long-term averages. So long as the economy can take it and core inflation remains stubborn, rate hikes remain on the table. This data set points towards another rate rise in June, and once again everyone will ask ‘is that the end?’ Markets have somewhat underestimated the journey it will take to get back towards a more palatable rate environment, with talk of rate cuts by the end of the year looking increasingly punchy.”
