Australian Investment Blog

US jobs data & wage growth – why it’s important Good Morning everyone Overview A quiet night in overseas markets to end what’s been a very volatile start to 2016. We highlighted trading ranges in yesterday’s note flagging the theme that those markets supported by central banks have continued to perform reasonably well – particularly the US which actually finished the quarter in the black – up +1.5% for the DOW JONES. Economic data is obviously key to US monetary policy – and probably the short term fate of markets. Non-Farm payrolls data is out in the US tonight with the market expecting +206,000 – but more importantly, data on wage growth should be keenly watched. Although the US economy is adding jobs, we’re not seeing a lot of upward pressure yet on wages which, would suggest (as Fed Chair Janet Yellen has noted) there remains a fair amount of slack in the US labour market. We’d argue that US wages growth is the key indicator that will dictate Fed policy in 2016. Wages growth underpins inflation which – at this stage at least – remains a long way below the Fed target of 2%...
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