US jobs data: enough to pull trigger on rate hikes?

5th September 2015 By: Ranko Berich

US Non-Farm Payrolls – 04/09/15

The headline amount of jobs created may have dipped, but August’s job report detailed another month of steady improvement in the labour market. Although there were no fireworks in the report, it was by no means disappointing.

Payrolls rose by less than expected in August, but July’s report was revised upwards significantly. Wages also rose another 0.3 per cent and unemployment ticked down to just 5.1 per cent, its lowest level since 2008 and already below the Fed’s most recent estimate of unemployment’s central tendency in 2015.

In the Fed’s own language, there has certainly been ‘some further improvement in the labour market’, but the question is now if we can be ‘reasonably certain’ that inflation will rise to 2 per cent over the coming quarters.

With oil and other commodity prices finally finding some support, the improvements we’re seeing in the labour market should be enough for the Fed to finally pull the trigger on some very modest and gradual rate hikes.