US: Natural rate of unemployment falling – Deutsche Bank

According to Deutsche Bank analysts, the latest US NFP report, coming after jarringly poor ISM surveys earlier in the week, ended up being a bit of damp squib with something for both the bulls and the bears. 

Key Quotes

“The headline change in payrolls was slightly below consensus (136,000 versus 145,000), but the employment rate fell 0.2pp to a new 50-year low of 3.5%. The private payrolls figure was similar, coming in at 114,000 compared to expectations for 130,000. These misses were offset somewhat by a healthy +45,000 net revision to the previous two months.”

“More interestingly, wage growth was flat on the month, taking the year-on-year figure to 2.9%, its weakest pace in a year. Our economists think this will make the Fed more confident that the natural rate of unemployment has fallen, which should still enable them to cut rates later this month.”