Non-Farm Payrolls signal labour market strength

8th January 2016 By: Ranko Berich

Non-farm payroll figures – 8/1/16

If the US economy is slowing down, it’s certainly not showing yet in the labour market. The latest non-farm payrolls report shows that headline job creation is well above expected levels, and even though the latest month of wage growth was lacklustre, average earnings growth is clearly on the up.

Including the big upwards revision to last month, the economy has added over 100,000 more jobs than previously thought. The slight fall in average earnings in the US is irrelevant, since wages are clearly trending upwards and this will eventually filter through to inflation.

In the wider context of high job vacancies and low rates of initial jobless claims, this month’s report supports the Fed’s view of the economy. If the labour market continues functioning this well, the Fed will have good reason to stick to its plan to raise rates several more times in 2016, despite this week’s angst about China.