Let's obsess about labour in the US
- The Fed has economic data to support a rate hike (indeed, to support a rate hike some months ago). Market volatility works against the case for a rate hike. A single payrolls figure does not change the economic story much, but has the potential to change the market volatility story.
- We expect 195,000 on non-farm payrolls (the slight moderation in the ISM employment components consistent with that) and a 0.1% decline in the unemployment rate. As ever it is worth watching the back revisions. Those sort of figures should allow a September rate increase.
- The Euro area is offering GDP growth revisions. These coming in the wake of technical downgrades from the ECB, that were accompanied by a decidedly non-technical dovish spin from the ECB president. We think the hurdle for additional quantitative policy remains high, however.
- Japanese cash earnings disappointed again – distorted by timing issues related to summer bonuses, but still below expectations. This has relevance, as the hope is that exporters will translate enhanced profits into higher wages, which employees will translate into consumption. Not happening yet.