01 September 2023
If you are covering the latest employment figures in the US, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The US jobs market has continued its hot streak, with an additional 187,000 jobs added in August, above expectations and somewhat vindicating the Federal Reserve’s hawkish stance. At Jackson Hole last week, Jerome Powell made it clear to the market that it shouldn’t expect cuts anytime soon, and with the economy still holding up its end of the bargain, the soft landing the Fed craves so much is within sight.
“However, it is clear that the pace of labour market growth is beginning to slow, and with previous months’ reports being revised down and the unemployment rate ticking up to its highest level in over 18 months, it is perhaps indicative that we are at or near the end of the rate hiking cycle. The Fed won’t want to overcorrect, and with its next meeting around the corner, and the data remaining stable for now, we can see it hitting the pause button and moving into a holding pattern. After all, it can be anything from 12 months to two years for rate increases to feed into the real economy, so realistically we are just at the early stages of the impacts being felt.
“Clearly, however, the labour market remains a position of strength for the US economy and indicates that a recession at this stage is unlikely, although it cannot be discounted entirely. As inflation has reached more palatable levels, the next task is to ensure the economy doesn’t lose the momentum it has built in what has been an incredibly difficult environment.”
