After US jobs report, FOMC must also watch labour market, says Pantheon's Tombs
Macro Impact 4
Samuel Tombs, chief US economist at Pantheon Macroeconomics, noted that after non-farm payrolls fell by 23,000 in July, far below the market forecast of an 80,000 increase, the Federal Open Market Committee cannot focus solely on curbing inflation while labour market weakness rapidly resurfaces. Revisions to the previous two months totalled a negative 103,000, with a large drop of 53,000 in government workers, and a temporary decline in education employment at the end of the school year accentuated the slowdown, but private payrolls rose by just 30,000 for the second straight month. He also analysed that companies are likely to maintain a cautious stance on new hiring given high energy costs and uncertainty over the impact of artificial intelligence, and that slowing household spending growth as the tax refund effect fades will also weigh on employment in consumer-facing businesses. Meanwhile, he expressed the view that the dip in the unemployment rate to 4.1% is merely noise, and that the modest 0.1% rise in average wages dispels fears of a wage-price spiral.
