Again, few things are more important to Wall Street than the jobs number due out on Friday.
And in the hours before its release developments have called the consensus estimates into question. The Street had been looking for 224,000 new jobs, according to Reuters, but data released by ADP on Wednesday showed the private sector had only created 169,000 – that’s the worst number since January 2014.
S&P U.S. economist Satyam Panday remains optimistic. He still expects a number north of 200,000. “Leading indicators are relatively strong,” he said. “Initial claims were encouraging and the purchasing manufacturing survey was good.”
Speculation has never been more intense, because its widely believed the Fed will scrutinize this jobs report in an attempt to determine when to start raising rates from their current historic lows. Panday said what probably matters most to Janet Yellen and company is wage growth.
And currently, “when you look at wage growth there are two different narratives. The employment cost index was 2.6% year over year but the average wage is stalling,” he said.
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As the central bank examines the Labor Department’s wage numbers, unless the data is off the charts, Panday thinks the Fed will err on the side of caution. “Given the weak first quarter we had and some of the global volatility the Fed will probably want to wait to raise rates to be sure the economy can stand on its own,” he said. In turn, he thinks a rate hike in June is off the table.
However, if other data looks relatively positive, Panday wouldn’t be surprised to see the Fed move in the fall. “If the rebound holds up, I’m thinking in September,” he said.
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