US NFP: Slowing of hiring? - Rabobank

Analysts at Rabobank suggest that in the US ISM non-manufacturing index, the trouble to attract new personnel saw the employment sub-index decline -3.1pp to 54.2 and whilst this is still expansionary, signs from both the manufacturing and non-manufacturing sectors are pointing to a slowing of hiring.

Key Quotes

“This could put a drag on the non-farm payrolls number today. Whilst we should see a rebound from the sharp drop to just 103,000 jobs in March, there is a risk that this recovery comes in somewhat below the 192,000 consensus number. That said, a slight miss would by no means be an immediate cause for concern: the unemployment rate hovers around 4% (currently it is just over that at 4.1%), and eventually the number of new jobs added to the economy should gradually decline as the group of people still looking for a job shrinks. There may still room for new inflow, with the labour force participation at relatively low levels, but those returning to the labour market may face a substantial skill gap that could make it more difficult to find a matching job.”

“The bottom line is that this labour market tightening should eventually cause wage demands to pick up and broaden further across the US economy, although the expectations see hourly earnings hold steady at 2.7% y/y in today’s report.”