Another positive surprise on the wages front with a strong pick up in the headline data. The rebound in weekly wage growth was partly due to a more favourable hours worked comparison though. Hourly wage growth has been steadier. Alongside steady inflation means real income growth has improved, continuing the recovery we’ve seen in recent months.
A positive surprise, particularly after the weak ADP number on Wednesday, with non-farm payrolls +224k in June, although there were mild downward revisions for the previous two months (-11k).
Modest improvement in the UK wages story. But it still appears that nominal gains are topping out with data flattered by the number of hours worked (at 32.2 vs. 31.8 in the same period a year ago). The stabilisation in nominal growth rates is not necessarily bad news for consumption given that inflation also looks to be moderating again, certainly at the headline level.
Mirroring the weak ADP figure the May payrolls numbers also surprised on the downside. Revisions also downward, which also showed up in ADP’s release. The participation rate was stable, as was the unemployment rate. Hourly earnings were a little softer than expected and hours worked were flat at 34.4, which is down versus a year ago, dampening gains in weekly wage growth.
Another downside surprise for inflation. While the headline y/y rate moved up to 1.49%, core PCE was flat on the month which took the y/y rate back down to just 1.553%. That’s enough to round it up to 1.6% on the wires but it’s still the lowest print since Sep 2017.
Price data basically confirms what we knew, inflation is back in a moderating phase with dip in core highlighting that. Income a little below expectations but the underlying wage story remains constructive, so nothing to be concerned about. Although in terms of Fed priorities the pick-up in wage growth is not enough to offset broader demand concerns.
Despite positive noises on wages from both the Fed and the ECB there is little sign we’re returning to the…