Macro of the Week – US wages accelerate

Tue 06 Feb 2018

US hiring picked up in January and wages rose at the fastest pace since the GFC. Hourly earnings increased 0.3%, resulting in an unexpected year-on-year increase of 2.9%, up from 2.7% in December (which was also revised up from 2.5%). This was on the back of a nonfarm payrolls increase of 200k, which was upwardly revised from 160k as well as ahead of expectations for 180k. Unemployment was anchored at 4.1%, while underemployment increased slightly from 8.1% to 8.2%. Overall the figures point to a labour market which is on solid ground and is potentially accelerating. Following the data release Treasury yields and the US Dollar gained as it added to concerns of inflationary pressures mounting, while reinforcing the idea that the Fed will increase interest rates at least 3 times, as it has forecast this year.