Payden & Rygel: US employment figures
US Non-Farm Payrolls [NFP] increase 162,000 in August nearly tripe the forecast for 56,000. Unemployment rate unchanged at 4.1%
By Jeffrey Cleveland, Chief Economist, Payden & Rygel
Welcome news on the jobs front with a solid August NFP growth figure, revisions to prior months, and even a rebound in labor force participation. It turns out July’s very weak initial reading may have been a fluke. The 3-month average of private NFP is now around 75k, which is more than enough to keep downward pressure on the unemployment rate.
We think the August report keeps the door open to a September rate rise. Waller's comments yesterday suggest the entire meeting decision (hike/no hike) rests on the August CPI reading.
Our assessment is that core inflation will remain sticky, around 3%, out over the next year, so whether the Fed hikes in September or not is a coin flip, they will likely hike 2-3 times in the coming 12 months. With the labor market holding up, the central bank is running out of excuses for not hitting its inflation target for the sixth year running.