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US: Slowdown in job growth is on the cards – Danske Bank

FXStreet (Delhi) – Research Team at Danske Bank, expect slowdown in US job growth in September to 180,000 and even though this is slower than the recent trend, it is still solid job growth and enough, if sustained, to put additional downward pressure on the unemployment rate.

Key Quotes

“Job growth has been running at an impressive pace since early last year, pushing the unemployment rate to 5.1% - very close to the assumed level of NAIRU (around 5.0%). The rapid job growth has been helped along by a combination of solid GDP growth and slow labour productivity growth.”

“Over the past three months, the US economy has added, on average, 221,000 jobs per month - a pace that cannot be sustained in an economy where potential labour force growth, under a positive assumption about a rebound in the labour participation rate, is only around 150,000 per month.”

“In our view, job growth will need to drop below the 160,000 mark before the Fed will see it as an obstacle to starting the tightening cycle later this year. In terms of the unemployment rate, we expect the rate to stay unchanged at 5.1% in September but to head below 5% by year-end.”

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