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US labour market to resume the strength – Danske Bank

FXStreet (Edinburgh) - Allan von Mehren, Chief Analyst at Danske Bank, expects a solid reading from today’s US Non farm Payrolls, resuming the upbeat momentum.

Key Quotes

“We look for the non-farm payrolls to make a decent rebound in September after last month’s disappointing report. Our models predict an increase of 250,000 (consensus 205,000). We expect the unemployment rate to stay constant at 6.1% (same as consensus)”.

“There are two main reasons why we look for a robust payroll number: First, most labour market indicators look very strong currently: jobless claim figures are low, the ISM composite employment index is at the highest level since 2005 and the jobs plentiful versus hard to get balance has also continued to rise in the past months”.

“Second, service payrolls have been very low in the past two months despite strong consumer spending and the very high ISM service employment index and we look for a decent rebound here”.

“Wage growth also continues to be a focus point as it is an important input to the Fed’s inflation outlook”.

“The wage growth has been subdued for some time now and we have yet to see the improvements in the labour market being reflected in the wage levels”.

“However, indicators such as time to fill vacancies indicate that wage pressure is gradually building up”.

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