05 July 2024
If you are covering the latest employment data from the US, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“The US labour market appears to be cooling as June saw an anticipated dip in momentum with 206,000 jobs added, down from 272,000 in May. Meanwhile, average hourly earnings rose 3.9% on an annual basis – the lowest level seen in three years.
“Fed policymakers raised concerns at its latest monetary policy meeting that unemployment could rise too quickly should rates be held for too long. In June, unemployment ticked up to 4.1% from 4%, and there remains a risk that it could increase further.
"Though this is a relatively solid jobs increase, coming in slightly higher than expected, when considered alongside the downturn in earnings as well as signs of softening elsewhere in the economy, it could prove to be enough for a shift in the Federal Reserve’s stance. The Fed’s decision making is highly data sensitive, and with a growing number of datapoints suggesting a slowing economy it may well consider easing rates later this year.
"However, as the presidential election campaign draws closer, the Fed will not wish to be seen as being political in any way, so it is unlikely to make any sudden moves while things are hotting up. The Fed has also confirmed it requires greater confidence that inflation is heading sustainably back down to target, and with this not yet achieved and looking increasingly likely to be a slow process, just one rate cut this year is still likely to be a sensible prediction.”
