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US non-farm payrolls (NFPs) are upon us once more, with the US expecting to have added 180,000 jobs in January, an improvement over December’s 148,000. Average hourly earnings are expected to have risen by 0.3%, in line with last month’s figure.
NFPs are not quite the blockbuster event that they once were. In the financial crisis, the figure was closely watched, being a key barometer of the health, or otherwise, of the US economy. Now, the recovery is firmly in place, and jobs growth has oscillated around the 200,000-per-month line since 2012. Wages are still the missing piece in the puzzle, although even here the month-on-month figure has recovered from its October 2017 reading of -0.1%.
The main reason for continuing to watch NFPs remains the influence they will have on the Federal Reserve (Fed). The market currently expects three rate increases from the Fed, under its new leader, Jerome Powell. Markets will be watching to see if wages begin to pick up. Since the jobs recovery is done and dusted, it is the wage figure that should bear watching. A tighter labour market should prompt wage increases, although that has yet to filter through, it seems.