Notes From the Desk: North American Employment Data – 50/50 on 50
Today’s payroll data confirms that job growth is slowing, opening the door for further central bank accommodation.
The numbers:
US
- 142k jobs created (165k expected).
- Unemployment rate: 4.2% (4.3% expected).
- YoY wage growth: 3.8% (3.7% expected).
Canada
- 1k jobs created (25k expected). The mix was lousy, with 65.7k part-time jobs created at the expense of 43.6k full-time jobs lost.
- Unemployment rate: 6.6% (6.5% expected).
- YoY wage growth: 4 9% (4.8% expected).
The implications:
With the Federal Reserve having signalled their concerns about a slowing labour market, today’s numbers mean a cut later this month is a foregone conclusion. The debate is now over the magnitude, with bond traders putting the odds of a 50 bps cut at 50%.
The domestic job market continues to weaken, keeping the Bank of Canada on course for a steady string of 25 bps cuts to 3%. Today’s data reduces the chances that the Bank skips a meeting while raising the odds that they sneak in a 50 bps cut at some point if job creation continues to fall.
Yield curves have steepened, with 2y yields 3-4 bps lower, while 10y rates are broadly unchanged.
