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5 July. 2016 Can We be Sure The Labor Market is Tight Enough to Boost Wage Gains? (Publication Centre)

We have argued consistently for some time that the next year will bring a clear acceleration in U.S. wage growth, because the unemployment rate has fallen below the Nairu and a host of business survey indicators point to clear upward wage pressures. Nominal wage growth has been constrained, in our view, by the unexpected decline in core inflation from 2012 through early 2015, which boosted real wage growth and, hence, eased the pressure from employees for bigger nominal raises.

20 July. 2016 Job Growth Faded Pre-Referendum, but the Real Hit Lies Ahead (Publication Centre)

Today's labour market data look set to show that the headline, three-month average, unemployment rate held steady at just 5% in May, unchanged from April's reading.

28 March 2018 Japan's Labour Market to Continue Tightening this Year (Publication Centre)

Data to be released this Friday should show that Japan's labour market remains tight, though the unemployment rate likely ticked back up in February, to 2.6%, after the erratic drop to 2.4% in January.

8 May 2017 Fed Hawks Will Focus More on Unemployment than Wage Gains (Publication Centre)

At their March meeting FOMC members' range of forecasts for the unemployment rate in the fourth quarter of this year ranged from 4.4% to 4.7%, with a median of 4.5%. But Friday's report showed that the unemployment rate hit the bottom of the forecast range in April.

16 March 2017 Slowing Wage Gains Support the MPC's Loose Policy Stance (Publication Centre)

Yesterday's labour market data significantly bolster the consensus view on the MPC that interest rates do not need to rise this year to counter the imminent burst of inflation. Granted, the headline, three-month average, unemployment rate fell to 4.7% in January--its lowest rate since August 1975--from 4.8% in December, defying the consensus forecast for no-change.

5 September. 2016 Wanted: A New Monetary Policy Target for the ECB (Publication Centre)

In principle, predicting the interest rate policies of an inflation-targeting central bank should be simple. Our first chart shows a standard Taylor Rule rate for the Eurozone based on the ECB's inflation target of 2%, the long-run average unemployment rate and a long run "equilibrium interest rate" of 1.5%. This framework historically has been a decent guide to ECB policy.

29 November 2017 Unemployment in Mexico Keeps Falling, but Risks Have Increased (Publication Centre)

Yesterday's October labour market data in Mexico showed that the adjusted unemployment rate rose a bit to 3.4%, from 3.3% in September.

08 Mar. 2016 Can the Spike in Labor Market Participation be Sustained? (Publication Centre)

It's very tempting to look at the upturn in the participation rate in recent months and extrapolate it into a sustained upward trend. If the trend were to rise quickly enough, it conceivably could prevent any further fall in the unemployment rate, preventing it falling below the bottom of the Fed's estimated Nairu range.

4 January 2018 Unemployment in Germany is Close to Nairu. Will Wages Rise? (Publication Centre)

The labour market in Germany tightened further at the end of last year. The headline unemployment rate--unemployment claims as a share of the labour force--fell to 5.5% in December, from 5.6% in November, driven by a 29K plunge in claims.

30 March 2017 Can Unemployment Fall to 4% or Less? What Would the Fed do? (Publication Centre)

The unemployment rate hit its post-1970 low in April 2000, at the peak of the first internet boom, when it nudged down to just 3.8%. The low in the next cycle, first reached in October 2006, was rather higher, at 4.4%.

13 July 2017 Don't Extrapolate from May's Uptick in Basic Wage Growth (Publication Centre)

Yesterday's labour market data gave sterling a shot in the arm on t wo counts. First, the headline, three-month average, unemployment rate fell to just 4.5% in May, from 4.6% in April.

13 December. 2016 Today's NFIB Labor Data are not New, but they are Important (Publication Centre)

The falling unemployment rate and the threat it poses to the inflation outlook mean that the labor market numbers in the NFIB small business survey attract more attention than the other data in the report.

9 Nov. 2015 The Unemployment Rate Is the Key Measure of Labour Market Slack (Publication Centre)

The Monetary Policy Committee continues to assert that it can leave interest rates at rock-bottom levels, even though the unemployment rate has returned to its pre-recession level, because it understates the extent of slack in the labour market. If that hypothesis were correct, however, the relationship between the unemployment rate and wage growth would have weakened. But this clearly has not happened, as our first chart shows.

27 June 2017 Japanese Inflation to Hold up as Food Prices Counterbalance Energy (Publication Centre)

Japanese services price inflation edged down in May as the twin upside drivers of commodity price inflation and yen weakness began to lose steam. We expect wage costs to begin edging up in the second half but this will provide only a partial counterbalance.

27 March 2018 Consumers' Spending Constrained by Cashflow, not Confidence (Publication Centre)

Whichever way you choose to slice the numbers, consumers' spending is growing much more slowly than is implied by an array of confidence surveys.

26 September 2017 Is the Most Important Data--Wage Growth--Forecastable? (Publication Centre)

Markets will be hyper-sensitive to U.K. data releases following the MPC's warning that it is on the verge of raising interest rates.

27 November 2017 Economic Growth Set to Rise Next Year, but Pain Will Follow in 2019 (Publication Centre)

We have argued for some time that the revival in nonoil capex represents clear upside risk for GDP growth next year, but it's now time to make this our base case.

28 September 2016 No Scope For Complacency on Inflation as Import Prices Rise (Publication Centre)

Our forecast that CPI inflation will shoot up to about 3% in the second half of 2017, from 0.6% last month, assumes that pass-through from the exchange rate to consumer goods prices will be as swift and complete as in the past. Our first chart shows that this relationship has held firm recently, with core goods prices falling at the rate implied by sterling's appreciation in 2014 and 2015.

28 June 2018 How will the Chinese Authorities Respond as Pro ts Growth Slows (Publication Centre)

Industrial profits growth is closely watched by the Chinese authorities, even more so now that deleveraging is a prime policy aim.

26 June 2018 Treat Surveys Pointing to Faster Wage Growth Sceptically (Publication Centre)

This was supposed to be the year that wage growth finally would pick up and signal clearly to the MPC that the economy needs higher interest rates.

27 November 2017 China Instigates Another Friday Reform, Import Tariffs are Cut (Publication Centre)

Since the Party Congress last month, China has made a number of bold moves in multiple policy fields, with a regularity that almost implies the authorities are working through a list.

21 March 2018 Lower CPI Inflation in February Should Give the MPC Doubts (Publication Centre)

February's consumer price figures give the MPC reason to doubt the case for raising interest rates again as soon as May.

18 July 2018 Peru's Economy Rebounded in the First Half Will the Strength Continue (Publication Centre)

Data released over the weekend confirm that the Peruvian economy enjoyed a strong second quarter. The economic activity index rose 6.4% year-over-year in May, well above market expectations, and up from 3.2% in Q1.

18 July 2018 The Subdued Trend in Wage Growth is Unlikely to Improve Soon (Publication Centre)

The long-awaited decisive upturn in wage growth still hasn't emerged. Year-over-year growth in average weekly wages, excluding bonuses, held steady at 2.6% in May.

18 May 2017 Will Strong Employment Growth Be Sustained? (Publication Centre)

Yesterday's labour market figures revealed that employment growth has picked up this year, despite the shadow cast over the medium-term economic outlook by Brexit. The 122K, or 0.4%, quarter-on-quarter rise in employment in Q1 was the biggest since Q2 2016.

17 January 2017 Peru's Growth is Solid, Will Copper Prices Offer More Support in 2017? (Publication Centre)

Yesterday's economic activity data from Peru signalled that the relatively firm business cycle continues. The monthly GDP index accelerated to 3.6% year-over-year in November, rising from 2.1% in October, but marginally below the 4.4% on average in Q3. Growth continued to be driven by mining output, including oil and gas, which rose 15% year-over- year. The opening of several new mines explains the upturn, and we expect the sector to remain key for the Peruvian economy this year.

17 Feb. 2016 Don't Dwell on December's Disappointing Wage Growth (Publication Centre)

Today's labour market figures look set to show that wage growth has continued to slow, fuelling speculation that interest rates are going nowhere soon. But a close examination of why wage growth has weakened suggests investors will be surprised by a robust rebound later this year.

15 November 2017 Too Soon to Claim Peak Inflation, But it Will Fall Swiftly in 2018 (Publication Centre)

CPI inflation held steady at 3.0% in October, undershooting our forecast and the consensus by 0.1 percentage point and the MPC's forecast by 0.2pp.

16 March 2018 Kuroda Prepares Parliament to Foot the BoJ's Exit Bill (Publication Centre)

Governor Kuroda dropped further hints in speeches earlier this week that interest rates will be going up. He discussed methods of exit, in loose terms.

19 May 2017 Expect a Hike on June 14 Unless Financial Conditions Tighten, a Lot (Publication Centre)

The probability of a rate hike on June 14, as implied by the fed funds future, has dropped to 90%, from a peak of 99% on May 5.

2 February 2018 A Solid Finish to 2017 for Brazil, Pointing to Upside Risks (Publication Centre)

Brazil's December industrial production and labour reports, released this week, confirmed that the recovery remained solidly on track at the end of last year.

21 October. 2016 The BCB is Cautious, But its Inflation Fears Will Ease Soon (Publication Centre)

Brazil's monetary policy committee, the Copom, cut the Selic rate by 25bp to 14.0% in a unanimous decision, without bias, on Wednesday. This marks the start of the first easing cycle since 2012, and it arrives after 15 months with rates held at 14.25%.

23 February 2017 Fiscal Easing Could Boost Growth Substantially, but not for Long (Publication Centre)

The White House budget proposals, which Roll Call says will be released in limited form on March 14, will include forecasts of sustained real GDP growth in a 3-to-3.5% range, according to an array of recent press reports.

21 February 2017 Wages Don't Necessarily Lead Inflation, but Unit Labor Costs do (Publication Centre)

Fed Chair Yellen said something which sounded odd, at first, in her Q&A at the Senate Banking Committee last Tuesday. It is "not clear" she argued, that the rate of growth of wages has a "direct impact on inflation".

20 November 2017 Terrible Timing for Tax Cuts -- if they Pass, the Fed Will Hike More Quickly (Publication Centre)

The passage of the House tax cut bill does not guarantee that the Senate will follow suit with its own bill, still less that both chambers will then be able to agree on a single bill which can then b e signed into law. As

2 January 2018 The Economy Won't Spring Back to Life in 2018 (Publication Centre)

The economy slowed less than we expected in 2017.

2 May 2018 The BoK is on a Mission, and will Hike in May, it's not About Inflation (Publication Centre)

We expect the BoK to hike this month, believing that it's necessary to curtail household debt growth now, in order to prevent a sharper economic slowdown as the Fed hiking cycle continues, China slows, and trade risks unfold.

25 April 2018 Brazil's Labour Market Recovery Has Lost Momentum, but it will Improve (Publication Centre)

In Brazil, last week's formal payroll employment report for March was decent, with employment increasing by 56K, well above the consensus expectation for a 48K gain.

3 April 2017 Brazil's Labour Market is Still Poor, but Likely Will Stabilize Soon (Publication Centre)

Economic data released on Friday underscored our view that bolder rate cuts in Brazil are looming. The BCB's latest BCB's inflation report, released on Thursday, showed that policymakers now see conditions in place to increase the pace of easing "moderately" .

6 December 2017 ADP to Report Strong November Jobs, but will Overstate Official Data (Publication Centre)

The ADP measure of private employment hugely overstated the official measure of payrolls in September, in the wake of Hurricane Irma, but then slightly understated the October number.

7 August 2017 While we were Out... (Publication Centre)

...The Fed did nothing, surprising no-one; the labor market tightened further; the housing market tracked sideways; survey data mostly slipped a bit; and oil prices jumped nearly $4, briefly nudging above $50 for the first time since May.

5 September 2017 Underlying Trend in Labor Data Unaffected by "Soft" August Report (Publication Centre)

We had hoped that the statistical problems which have plagued the initial estimates of August payrolls in recent years had faded, but Friday's report suggests our judgement was premature.

5 May 2017 Payrolls Should Rebound to More than 200K, Wage Gains up too? (Publication Centre)

If the underlying trend in payroll growth is about 200K, then a weather-depressed 98K reading needs to be followed by a rebound of about 300K in order fully to reverse the hit. But the consensus for today's April number is only 190K, and our forecast is 225K.

5 January 2018 Robust December Jobs, Strong AHE and a New Low for Unemployment? (Publication Centre)

In the wake of yesterday's ADP report, which showed private payrolls up 250K in December, we have revised our forecast for today's official headline number up to 240K from 210K.

5 June 2017 May Payrolls Hit by the Calendar, Expect a Rebound, and a Fed Hike (Publication Centre)

We don't believe that payrolls rose only 138K in May. History strongly suggests that when the May payroll survey is conducted relatively early in the month, payroll growth falls short of the prior trend.

7 June 2018 Japanese Firms Have Hiked Pay to Retain Workers (Publication Centre)

Japan's average year-over-year wage growth slowed sharply in May, but this mainly was a correction of the April spike.

7 November 2017 JOLTS Report will Confirm that Labor Demand is Rising Strongly (Publication Centre)

No single measure of labor demand is always a reliable leading indicator of the official payroll numbers, which is why we track an array of private and official measures.

9 July 2018 China's PMI Points to Q2 Strength, but Watch Slump in Export Orders (Publication Centre)

China's official manufacturing PMI slipped in June, but the overall picture for Q2 is sound despite the uncertainty posed by rising trade tensions with the U.S.

9 March 2018 Payrolls Likely Strong Again, All Eyes on Unemployment and Wages (Publication Centre)

We'd be quite surprised if the headline payroll number today turned out to be far from the consensus, 205K, or our forecast, 225K.

8 June. 2016 Job Openings Likely Dipped in April, but Remain Very High (Publication Centre)

A casual glance at our char t below, which shows the number of job openings from the JOLTS report, seems to fit our story that the slowdown in payrolls in April and May--perhaps triggered by the drop in stocks in January and February--will prove temporary. Job openings dipped, but have recovered and now stand very close to their cycle high.

8 December 2017 Robust Jobs Data Will Emphasize the Labor Market's Tightness (Publication Centre)

We expect to see a 180K increase in November payrolls

8 August 2017 Watch the NFIB Survey for Clues to Job Growth, Capex and Inflation (Publication Centre)

The NFIB survey of small businesses today will show that July hiring intentions jumped by four points to +19, the highest level since November 2006. The NFIB survey has been running since 1973, and the hiring intentions index has never been sustained above 20.

4 May 2018 April Payrolls Likely Were Solid, but is Trouble Brewing for late Spring? (Publication Centre)

April payroll growth likely will be reported at close to 200K. Overall, the survey evidence points to a stronger performance, but they don't take account of weather effects, and April was a bit colder and snowier than usual. We're not expecting a big weather hit, but some impact seems a reasonable bet.

4 June 2018 The Labor Market Continues to Tighten, No end in Sight (Publication Centre)

The May employment report was somewhat overshadowed by the furor over the president's tweet, at 7.15AM, hinting--more than hinting--that the numbers would be good.

3 November 2017 The MPC Signals no Rush to Hike Rates Again (Publication Centre)

Markets were surprised yesterday by the absence of hawkish comments or guidance accompanying the MPC's decision to raise interest rates to 0.50%, from 0.25%.

30 August 2017 ADP Looks set to Report Another Solid Gain in Payrolls (Publication Centre)

We're expecting a hefty increase in private payrolls in today's August ADP employment report. ADP's number is generated by a model which incorporates macroeconomic statistics and lagged official payroll data, as well as information collected from firms which use ADP's payroll processing services.

3 July 2017 National Accounts Expose Britain's Economic Fragility (Publication Centre)

Last week's national accounts confirmed that the economy lost momentum abruptly in Q1, with net trade and investment failing to offset weaker growth in households' spending.

3 February 2017 MPC Signals Newfound Supply Optimism, no Near-Term Rate Hike (Publication Centre)

The absence of hawkish undertones in the minutes of the MPC's meeting or in the Inflation Report forecasts took markets by surprise yesterday. The dominant view on the Committee remains that the economy will slow over the next couple of years, preventing wage growth from reaching a pace which would put inflation on trac k permanently to exceed the 2% target.

29 November 2017 The Profit Share in GDP is set to Fall Sharply as Wage Growth Picks up (Publication Centre)

It doesn'tt matter if third quarter GDP growth is revised up a couple of tenths in today's third estimate of the data, in line with the consensus forecast.

15 March 2017 Rates Will Rise by 25bp Today, but Extra Dots More Likely in June (Publication Centre)

The Fed will hike by 25 basis points today, citing the tightening labor market as the key reason to press ahead with the process of policy normalization. We think the case for adding an extra dot to the plot for both this year and next is powerful.

30 June 2017 Core PCE Inflation set to Fall Again, but it won't Sway the Fed (Publication Centre)

We have argued recently that the year-over-year rates of core CPI and core PCE inflation could cross over the next year, with core PCE rising more quickly for the first time since 2010.

30 May 2017 Why Don't Markets Take the Fed's Interest Rate Forecasts Seriously? (Publication Centre)

Markets expect the Fed will fail to follow through on its current intention to raise rates twice more this year and three times next year. Part of this skepticism reflects recent experience.

4 December 2017 Hefty Tax Cuts at Full Employment Make no Sense, but they're Coming (Publication Centre)

It's not our job to pontificate on the merits, or otherwise, of the tax cut bill from a political perspective.

4 January 2018 ADP Likely Will Show a Solid Gain in December Private Employment (Publication Centre)

Today's ADP employment report for December ought to show private payrolls continue to rise at a very solid pace

31 October 2017 EZ GDP Growth Slowed in Q3, but Trend is Steady at About 2% (Publication Centre)

Yesterday's data kicked off the release of Eurozone Q3 growth numbers with a robust Spanish headline. Real GDP in Spain rose 0.8% quarter-on-quarter, slowing slightly from 0.9% in Q2, and le aving the year-over-year rate unchanged at 3.1%.

31 July 2017 How Tight Can Japan's Labour Market go? (Publication Centre)

The jobless rate fell back to 2.8% in June after the surprise rise to 3.1% in May. This drop takes us back to where we were in April before voluntary unemployment jumped in May.

30 November 2017 Japanese Retail Sales Disappoint but Confidence Rebounds (Publication Centre)

Japanese retail sales were unchanged in October month-on-month, after a 0.8% rise in September.

29 March 2017 Consumers are Happy, but Spending Will Lag Sentiment (Publication Centre)

Yesterday's data don't significantly change our view that first quarter GDP growth will be reported at only about 1%, but the foreign trade and consumer confidence numbers support our contention that the underlying trend in growth is rather stronger than that.

13 March 2017 Will the Labor Data Push the Fed to Hike Again in June? (Publication Centre)

With rates now certain to rise this week, the real importance of the employment picture is what it says about the timing of the next hike. To be clear, we think the Fed will raise rates again in June, and will at that meeting add another dot to the plot, making four hikes this year.

11 August 2017 Brazil's Inflation Rate is Falling, Mexico's Will Soon Follow (Publication Centre)

Inflation pressures in Brazil are now well- contained, with the headline rate falling to a decade low in July. We think inflation is now close to bottoming out, but the current benign rate strengthens our base case forecast for a 100bp rate cut at the next policy meeting, in September.

11 December 2017 200K-plus Payroll Gains Set to Continue, Wage Gains Will Rise (Publication Centre)

First things first: Payroll growth likely will be sustained at or close to November's pace.

11 January 2018 Will France Reap the Rewards of Supply-Side Reforms in 2018? (Publication Centre)

Momentum in French manufacturing eased slightly in November, but the setback was modest. Industrial production dipped 0.5% month-to-month, only partially reversing the revised 1.7% jump in October.

11 June 2018 China's Trade Surplus Should Start Trending up Again Later this Year (Publication Centre)

China's trade surplus has been trending down in the last two years.

11 April 2017 Why are Small Firms' Capex Plans so Soft even as Sentiment Soars? (Publication Centre)

Nowhere is the gap between sentiment and activity wider than in the NFIB survey of small businesses. The economic expectations component leaped by an astonishing 57 points between October and December, but the capex intentions index rose by only two points over the same period, and it has since slipped back. In February, the capex intentions index stood at 26, compared to an average of 27.3 in the three months to October.

10 October 2017 New Lows for Unemployment will Stiffen Fed Hawks' Resolve (Publication Centre)

Neither the 33K drop in September payrolls nor the 0.5% jump in hourly earnings tells us anything about the underlying state of the labor market.

15 June 2017 The MPC's Minutes Will Sound Balanced, Despite Surging Inflation (Publication Centre)

Today's MPC meeting and minutes are the first opportunity for Committee members to speak out in over a month, now that election "purdah" rules have lifted.

1 February 2017 Mexico's Economy Was Strong in Q4, but the Outlook has Darkened (Publication Centre)

Yesterday's first estimate of full-year 2016 GDP in Mexico indicates that growth gathered momentum over the second half of last year. But risks are now tilted to the downside, following the U.S. election. GDP rose 0.6% quarter-on-quarter in Q4, after a 1.0% increase in Q3. Growth was much slower in the firs t half, as shown in our char t below.

10 August. 2016 When Rates are Close to Zero, Behavior Changes (Publication Centre)

Slowly but surely, it is becoming respectable to argue that central bank policy in the developed world is part of the problem of slow growth, not the solution. We have worried for some time that the signal sent by ZIRP--that the economy is in terrible shape--is more than offsetting the cash-flow gains to borrowers.

11 October 2017 JOLTS Data Signal Rapid Job Gains, and Tight Labor Supply (Publication Centre)

Today's JOLTS survey covers August, which seems like a long time ago. But the report is worth your attention nonetheless.

10 March 2017 February Payrolls Look set for Strength, Seasonals Permitting (Publication Centre)

We're expecting a hefty increase in February payrolls today, but even a surprise weak number likely wouldn't prevent a rate hike next week. The trends in all the private sector employment surveys are strong and improving, and jobless claims have dropped to new lows too, though we think that's probably less important than it appears.

13 July 2017 Yellen Expects the Labor Market to Tighten Further, and Rates to Rise (Publication Centre)

Chair Yellen broke no new ground in her Testimony yesterday, repeating her long-standing view that the tightening labor market requires the Fed to continue normalizing policy at a gradual pace.

12 July 2017 Wage Growth Likely will Remain too "Anaemic" for the Governor this Year (Publication Centre)

Mark Carney emphasised in his Mansion House speech last month that he wants wage growth to "begin to firm" from recent "anaemic" rates before voting to raise interest rates.

15 December 2017 The PBoC's Meagre Hike Implies the RMB is set to Depreciate (Publication Centre)

Following this week's 25bp Fed hike, the PBoC hiked the main interest rates in its corridor by... 5bp. The move was unexpected so the RMB strengthened modestly; commentary is full of how this means the deleveraging drive is serious.

14 June 2018 Four Dots for 2018, and a Hawkish Tilt in the Statement (Publication Centre)

The Fed was more hawkish than we expected yesterday.

13 February 2018 Unit Labor Costs are Key to Inflation Outlook (Publication Centre)

Jim Bullard, the St. Louis Fed president, said last week that Phillips Curve effects in the U.S. are "weak", and that nominal wage growth is not a good predictor of future inflation.

13 April 2017 Slowing Labour Income Growth Highlights Consumers' Woes (Publication Centre)

Yesterday's labour market data showed that growth in households' income has slowed significantly in recent months. Firms are both hiring cautiously and restraining wage increases, due to heightened uncertainty about the economic outlook and rising raw material and non-wage labour costs. Consumers' spending, therefore, will support GDP growth to a far smaller extent this year than last.

12 July 2017 Yellen Will Re-affirm Fed Policy. Expect no Revelations, or Dates (Publication Centre)

Chair Yellen has become quite good at not giving much away at her semi-annual Monetary Policy Testimony.

12 October 2017 Core PPI at Risk from Hurricanes. Trend is Rising too, Slowly (Publication Centre)

Our forecast for a 0.3% increase in the September core PPI, slightly above the underlying trend, is even more tentative than usual.

12 October. 2016 How Hard Did FOMC Dissenters Push to Hike?  (Publication Centre)

Today's FOMC minutes will add flesh to the bones of the three dissents on September 21. The FOMC statement merely said that each of the three--Loretta Mester, Esther George and Eric Rosengren--preferred to raise rates by a quarter-point.

NEW YORK TIMES - U.S. Economy Added 257,000 Jobs in January - Unemployment Rate at 5.7% (Media Centre)

The economic momentum evident late last year carried into 2015, the Labor Department said Friday, with American employers adding 257,000 jobs in January as wage growth rebounded and more people joined the workforce

NEW YORK TIMES - U.S. Economy Added 271,000 Jobs in October - Unemployment Rate at 5% (Media Centre)

Chief U.S. Economist Ian Shepherdson on today's Payroll report

16 November. 2016 Statistical Quirks Will Flatter September's Jobs Report (Publication Centre)

Today's labour market figures likely will show that the Brexit vote has inflicted only minimal damage on job prospects so far. The unemployment rate likely held steady at 4.9% in the three months to September, and the risk of a renewed fall in unemployment appears to be bigger than for a rise.

16 July. 2015 Upbeat Yellen Dismisses European Risk - Focus Back on U.S. Data (Publication Centre)

Fed Chair Yellen said nothing very new in the core of her Monetary Policy Testimony yesterday, repeating her view that rates likely will have to rise this year but policy will remain accommodative, and that the labor market is less tight than the headline unemployment rate suggests. The upturn in wage growth remains "tentative", in her view, making the next two payroll reports before the September FOMC meeting key to whether the Fed moves then.

17 Dec. 2014 - Time Runs Out for (Publication Centre)

We think the FOMC's announcement this afternoon will not include the phrase "considerable time", signaling that the first rate cut will come at or before the middle of next year. At the same time, the Fed's new forecasts likely will show the unemployment rate falling into the Fed's estimated Nairu range this year, rather than the spring of 2016, as implied by their September forecasts.

17 Dec. 2015 The Beginning of "Gradual" or the Start of the Next Big Fed Mistake? (Publication Centre)

The FOMC yesterday did what it had to do, and said what it had to say. The super-doves were kicked into line, with a unanimous vote, though two members' blue dots showed they think rates should not have been raised. In our view, though, Dr. Yellen's avowed intention to raise rates gradually sits uneasily with her--correct--assertion that policy remains very accommodative, bearing in mind that the unemployment rate is now at the Fed's estimate of the Nairu, while evidence of accelerating wage gains is burgeoning.

17 May. Wage Growth to Continue to Rise, Despite Jobs Slowdown (Publication Centre)

The 21K rise in the headline, three-month average, unemployment rate between November and February confirmed last month that the U.K.'s period of fantastically strong growth in employment has ended. Timelier indicators, however, suggest unemployment is stabilising, not on the cusp of a major increase.

19 Oct. 2015 Real Wage Gains Signal the True Tightness of the Labor Market (Publication Centre)

Everyone is familiar by now with the conundrum in the labor market: How come wage gains have barely increased over the past few years even as the unemployment rate has fallen to very low levels, and business surveys scream that employers can't find the people they want? To give just one visual example of the scale of the apparent anomaly, our first chart shows the yawning gap between the headline unemployment rate and the rate of growth of hourly earnings, compared to previous cycles.

19 April 2018 Unemployment Will Soon Fall Again, Demand is Rising Faster than Supply (Publication Centre)

The unemployment rate has now been at 4.1% for six straight months. This does not mean, though, that it's safe to assume it will remain there, or indeed that this level of unemployment can be sustained without eventually triggering a meaningful increase in inflation.

10 Sept. 2015 Wage Cuts Pay off as Periphery Leads EZ Employment Higher (Publication Centre)

Workers in the euro area remain scarred by the zone's repeated crises, but the strengthening cyclical recovery is slowly starting to spread to the labour market. The unemployment rate fell to a three-year low of 10.9% in July, and employment has edged higher after hitting a low in the middle of 2013. Germany's outperformance is a key story, with employment increasing uninterruptedly since 2009, and the unemployment rate declining to an all-time low of 6.4%. Among the other major economies, the unemployment rate in Spain and Italy remains higher than in France. But employment in Spain has outperformed in the cyclical recovery since 2013.

10 Sept. 2015 Soaring Job Openings Signal Further Labor Market Tightening (Publication Centre)

We expected a modest correction in the number of job openings in July, following the surge over the previous few months, but instead yesterday's JOLTS report revealed that openings jumped by a mind-boggling 8.1% to a new record high. In the three months to July, the number of openings soared at a 35% annualized rate. As a result, the Beveridge Curve, which compares the number of openings to the unemployment rate, is now further than ever from normalizing after shifting out decisively in 2010.

10 August. 2015 While We Were Out... (Publication Centre)

...The Fed told investors that it now requires only "some further improvement" in labor market conditions before starting to raise rates-- the "some" is new--but did not set out any specific conditions. With the unemployment rate now just a tenth above the top of the Fed's Nairu range, 5.0-to-5.2%, and very likely to dip into it by the time of the decision on September 17, while payroll growth is trending solidly above 200K per month, rates already would have been raised some time ago in previous cycles.

2 Dec. 2015 Plunging German Unemployment Will Challenge the ECB Next Year (Publication Centre)

The labour market in the Eurozone continues slowly to improve. The unemployment rate fell to 10.7% in October from 10.8% in September, reaching its lowest level since 2013. The divergence in rates, however, between the major economies remains significant. Unemployment in France, Italy and Spain is still above 10%, but the advance German number continued their record-breaking form in November.

14 December 2017 Korea's Public Sector Jobs Drive Fizzles out. BoK to Hike Anyway (Publication Centre)

The Korean unemployment rate edged back up to 3.7% in November from October's 3.6%. Young graduates--the usual suspects--accounted for most of the rise.

14 Jan. 2015 - Small Firms Recovery Accelerates, but Labor Costs are Rising (Publication Centre)

Yesterday's data were second-tier in the eyes of the markets, but not, perhaps in the eyes of the Fed. The continued surge in job openings, which reached a 14-year high in December, means that the Beveridge Curve--which links the number of job openings to the unemployment rate--shows no signs at all of returning to normal.

15 June. 2016 Will Political Risk and Uncertainty Overwhelm the EZ Economy? (Publication Centre)

Based on key economic indicators, the Eurozone economy is doing splendidly, relative to its performance in recent years. Real GDP has been growing at 1.6%-to-1.7% year-over-year since the first quarter of last year, bank credit has expanded, and the unemployment rate is declining.

15 June 2017 Yellen to Markets: Core Inflation is Noisy, the Labor Market is the Key (Publication Centre)

The Fed's action, statement, and forecasts, and Chair Yellen's press conference, made it very clear the Fed is torn between the dovish signals from the recent core inflation data, and the much more hawkish message coming from the rapid decline in the unemployment rate.

16 February 2018 French Unemployment Plunged in Q4, and will Fall Further this (Publication Centre)

The French labour market improved much more than we expected in Q4. The headline unemployment rate plunged to 8.9%, from a downwardly-revised 9.6% in Q3.

29 Apr. 2016 German Labour Market are Solid, but Likely Will Disappoint Soon (Publication Centre)

German labour market data continue to break records on a monthly basis. The unemployment rate was unchanged at 6.2% in A pril, with jobless claims falling 16,000, following a revised 2,000 fall in March. March employment rose 1.2% year-over-year, down slightly from 1.3% in February, but the total number of people in jobs rose to a new high of 43.4 million.

5 June 2017 The Real Story of High Youth Unemployment in the Eurozone (Publication Centre)

Youth unemployment remains a blemish on the Eurozone economy, despite an increasingly resilient cyclical recovery. The unemployment rate for young workers aged 15-to-24 years stood at 18.4% at the end of April, chiefly due to high joblessness in the periphery.

2 Mar. 2015 If Real Wages are Key for the Fed, Policy Will Change Very Soon (Publication Centre)

If recent labor market trends continue, the four employment reports which will be released before the June FOMC meeting will show the economy creating about 1.1M jobs, pushing the unemployment rate down to 5.3%, almost at the bottom of the Fed's estimated Nairu range, 5.2-to-5.5%.

3 April 2018 Japan's Labour Market Tightness will Surprise the BoJ (Publication Centre)

Japan's unemployment rate edged back up to 2.5% in February after the drop in January to 2.4%.

7 Dec. 2015 After the First Hike, Next Week, Wage Gains Will Set the Pace (Publication Centre)

We're guessing Fed Chair Yellen would have preferred to have another acceleration in hourly earnings and a dip in the unemployment rate along side the hefty 211K leap in November payrolls, but no matter. At its October meeting, the Fed wanted to see "some further improvement in the labor market", and by any reasonable standard a 509K total increase in payrolls in two months fits the bill.

7 November. 2016 Wage Gains Will Focus Fed Minds (Publication Centre)

If the Fed needed further encouragement to raise rates next month, it arrived Friday in the form of solid jobs numbers, a new cycle low for the broad unemployment rate, and a new cycle high for wage growth.

03 Feb. 2016 Cyclical Optimism, but Structural Pessimism, on EZ Unemployment (Publication Centre)

Data yesterday showed that the downward trend in Eurozone unemployment continued towards the end of last year. The unemployment rate fell to 10.4% in December from 10.5% in November, extending an almost uninterrupted decline which began in the first quarter of 2013.

9 Sept. 2015 Ignore Swings in Random Labor Force Data: Focus on Job Gains (Publication Centre)

We read after the employment report that the drop in the unemployment rate was somehow not significant, because it was due in p art to a reported 41K drop in the size of the labor force, completing a 404K cumulative contraction over the three months to August. In our view, though, analysts need to take a broader approach to the picture painted by the household survey, which is much more volatile and less reliable than the payroll survey over short periods.

9 Nov. 2015 Fed Set to Hike in December, and then Faster than Markets Expect (Publication Centre)

At a stroke, the October payroll report returned the short-term trend in payroll growth to the range in place since 2011, pushed the unemployment rate into the lower part of the Fed's Nairu range, and lifted the year-over-year rate of growth of hourly earnings to a six-year high. The FOMC has never quantitatively defined what it means by "some further improvement in the labor market", its condition for increasing rates, but if the October report does not qualify, it's hard to know what might fit the bill. We expect a 25bp increase in December.

29 June. 2015 Mexican Recovery is Stuttering, but Better Days Ahead? (Publication Centre)

Mexico's economy hit a sticky patch in the first quarter, with confidence slipping, employment growth slowing and the downward trend in unemployment stalling. Indeed, the headline unemployment rate rose to 4.5% in May from 4.3% in April. The seasonally adjusted rate, though, was little changed at 4.4%, with a stable participation rate.

5 December. 2016 Labor Market Tightening Continues (Publication Centre)

We're pretty sure that the unemployment rate didn't drop by 0.3 percentage points in November. We're pretty sure hourly earnings didn't fall by 0.1%. And we're pretty sure payrolls didn't rise by 178K. All the employment data are unreliable month-to-month, with the wages numbers particularly susceptible to technical quirks.

29 Jan. 2016 Data and Copom Minutes Point to no Change in Brazilian Rates (Publication Centre)

Another month, another bleak Brazilian labor market report. The seasonally adjusted unemployment rate increased marginally to 8.3% in December, up from 8.2% in November, much worse than the 5.1% recorded in December 2014.

2 Sept. 2015 Slow, but Persistent, Decline in EZ Unemployment Continues (Publication Centre)

Yesterday's surprising decline in the Eurozone unemployment rate adds further evidence to the story of a slowly healing economy. The rate of joblessness fell to 10.9% in July from 11.1% in June, the lowest since the beginning of 2012, mainly driven by a 0.5 percentage point fall in Italy, and improvement in Spain, where unemployment fell 0.2 pp to 22.2%.

20 December 2016 Fiscal Easing Likely Would Boost Productivity, but not by Enough (Publication Centre)

The two key planks of the argument that a substantial easing of fiscal policy won't be inflationary are that labor participation will be dragged higher, limiting the decline in the unemployment rate, while productivity growth will rebound, so unit labor costs will remain under control.

22 February 2018 Labour Market Wobble Should Instil Some Caution on the MPC (Publication Centre)

The stand-out news yesterday was the increase in the headline, three-month average, unemployment rate to 4.4% in December, from 4.3% in September.

23 June 2017 Fed Officials Cite "Full Employment" but Worry About Recent CPI Data (Publication Centre)

A couple of Fed speakers this week have described the economy as being at "full employment". Looking at the headline unemployment rate, it's easy to see why they would reach that conclusion.

28 August. 2015 August Payrolls Will Support Fed Inaction - Unemployment Won't (Publication Centre)

We argued yesterday that the August payroll number is unlikely to be a blockbuster, thanks to a combination of problems with the birth/death model and the strong tendency for this month's jobs number to be initially under-reported and then revised substantially higher. But these arguments don't apply to the unemployment rate, which is derived from the separate household survey.

26 June 2017 Markets are Telling Themselves a Story, Shame it's a Fairytale (Publication Centre)

The core economic narrative in U.S. markets right now seems to run something like this: The pace of growth slowed in Q1, depressing the rate of payroll growth in the spring. As a result, the headline plunge in the unemployment rate is unlikely to persist and, even if it does, the wage pressures aren't a threat to the inflation outlook.

23 Nov. 2015 How to Scare Yourself Over the U.S. Inflation Outlook (Publication Centre)

Should you be feeling in the mood to panic over inflation risks--or more positively, benefit from the markets' underpricing of inflation risks--consider the following scenario. First, assume that the uptick in wages reported in October really does mark the start of the long-awaited sustained acceleration promised by a 5% unemployment rate and employers' difficulty in finding people to hire. Second, assume that the rental property market remains extremely tight. Third, assume that the abrupt upturn in medical costs in the October CPI is a harbinger o f things to come. And finally, assume that the Fed hawks are right in their view that the initial increase in interest rates will--to quote the September FOMC minutes--"...spur, rather than restrain economic activity". Under these conditions, what happens to inflation?

WALL STREET JOURNAL - Economists react to the May jobs report: "Unambiguously Positive" (Media Centre)

Chief US economist Ian Shepherdson on the latest Jobs report

BLOOMBERG - Chile Labor Market Defies Slowdown as Manufacturing Shrinks (Media Centre)

Senior International Economist Andres Abadia on Chile's jobless rate

FORBES - All Hail The Eurozone's Disaster-Prone Economy (Really) (Media Centre)

Provocative notes from Ian Shepherdson, the Chief Economist at Pantheon Macroeconomics

WALL STREET JOURNAL - Economists react to the May jobs report: "Unambiguously Positive" (Media Centre)

Chief US economist Ian Shepherdson on the latest Jobs report

WALL STREET JOURNAL - Economists react to the May jobs report: "Unambiguously Positive" (Media Centre)

Chief US economist Ian Shepherdson on the latest Jobs report

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