NFP: Gradual slowdown to be expected, but wage pressures likely to rise - ING

James Smith, Developed Markets Economist at ING points out that any concerns for the Federal Reserve about lower payrolls will be outweighed by a rebound in wage growth.

Key Quotes: 

“After two months of bumper payrolls figures, it was back to reality in March as the rate of jobs growth slowed to 103k. On the face of it, this may sound a little disappointing. However, we are slightly less convinced.”

“Payrolls have a bit of a track record of under-performing in March. But we also think that the pattern we’ve seen over the past couple of reports - soaring employment and a rapid influx of workers into the labour force – sounded a little too good to be true.”

“Other surveys have pointed to the fact that it is becoming harder and harder for firms to find staff.”

“A gradual slowdown in jobs growth is to be expected. But it also suggests that wage pressures are building – and that’s the message from today’s figures. Average hourly earnings increased by 0.3% on the month, taking the year-on-year rate to 2.7%. Given the skill shortages discussed above, we’d expect this to test the 3% level again over coming months.”