NFP: January should see a return to a more sustainable pace of hiring - CIBC

On Friday, the US official employment report is due. Analysts at CIBC, consider that non-farm payroll should rise at a more sustainable pace of hiring after a strong end of 2018. 

Key Quotes: 

“A 174K gain in jobs would normally be enough to put downward pressure on the unemployment rate, but since that measure is derived from a separate survey, it is likely that the unemployment rate ticked up to 4.0% temporarily as furloughed workers were classified as unemployed in that survey. A 0.2% gain in wages would leave annual wage growth at above 3%.”

“Despite January’s figures displaying the temporary impacts of the government shutdown, underlying momentum suggests that the US economy has room for continued, healthy employment gains in the months ahead, with the prime-age employment-to-population ratio still below its prerecession levels. With some labor market slack remaining, the Fed should feel comfortable in taking a pause on raising rates until Q2.”

“We are below consensus on wage growth which would be bearish for the USD and bullish for fixed income.”