US: NFP supports growth and a December rate hike - Wells Fargo

According to analysts from Wells Fargo, today’s employment data supports the outlook for a 2% growth trend and a December rate hike. 

Key Quotes: 

“Nonfarm payrolls rose 156,000 in September and by an average of 192,000 over the past three months. These gains are consistent with solid consumer spending and housing/construction improvements in the second half of 2016. The unemployment rate rose to 5.0 percent as labor force participation rate rose a touch—a good sign for the economy. This remains within the FOMC’s range for full employment.”

“The overall employment-population ratio ticked up in September, consistent with the FOMC’s views that the labor market can continue to improve even if the unemployment rate is little changed.”

“One sign of tightening in the labor market is the gradual pick-up in average hourly earnings with the unemployment rate near estimates of full employment. Average hourly earnings rose 0.2 percent in September, putting the year-over-year gain at 2.6 percent. This pace of wage inflation would still support a FOMC move to raise the funds rate in December, but is not enough to support a more aggressive set of moves in 2017 at a pace above the path indicated in the dot plot. Upward wage gains will put upward pressure on unit labor costs and thereby inflation and downward pressure on profits, even with more modest gains in the labor market.”