On Friday, the US jobs report showed that the pace of job creation bounced back in June and addressed investors’ concerns after a worrying slump in May. The US economy added 222k nonfarm jobs in June compared to an upwardly revised figure of 152k in the previous month. However, the lack of consistent wage pressure scaled down the market’s optimism. Average hourly earnings grew 2.5%y/y in June (versus 2.6% expected) compared to a downwardly revised number of 2.4% in May.
June’s inflation figures are due for released on Friday and according to the latest survey, headline inflation is expected to have eased to 1.7%y/y from 1.9% in the previous month amid falling energy prices. The core measure is expected to remain stable at 1.7%.
After printing at 0.5%y/y in May, real average weekly earnings will also be released on Friday. The indicator started the year in negative territory, contracting 0.6% and 0.5% in January and February, respectively, before bouncing back to 0.6% in April, highlighting the Fed’s sensitive work. Indeed, the solid pace of hiring failed to translate into higher nominal wage for Americans, while looking at the adjusted measure for inflation, the picture is even darker as since last August real wage growth have been slowing down significantly. We suspect the Fed wants to see a solid recovery in real wage before accelerating the pace of tightening. This is indeed the guarantee of a solid job market that could stand tighter monetary conditions.
The greenback was little changed after Friday’s jobs report. The dollar rose 0.22% against the Japanese yen and 0.12% against the Canadian dollar. Investors were looking for a new driver. They will have to wait another round as the report didn’t allow to reduce the level of uncertainty.By Arnaud Masset