The November jobs report revealed a surprising surge in hiring (227,000 jobs added), exceeding expectations and significantly outpacing October’s figures. This robust employment growth, coupled with higher-than-anticipated wage increases, has reduced the likelihood of an imminent interest rate cut by the Federal Reserve.
The U.S. economy added a robust 254,000 nonfarm payroll jobs in September, significantly surpassing expectations and signaling a strong labor market. The unemployment rate also dipped to 4.1%, while wage growth saw an uptick. These positive indicators suggest a resilient job market despite recent economic uncertainties.
British pay growth slowed to its weakest pace in nearly two years, suggesting inflation pressures are easing, while unemployment surprisingly dropped to its lowest level since February. This data may encourage the Bank of England to consider cutting interest rates further. Despite the slowing wage growth, real wages are improving and the number of job vacancies remains high.
Japan’s labor ministry panel has decided to increase the national average minimum wage by 5% to 1,054 yen ($6.85) per hour, the largest ever increase. This move aims to boost household purchasing power and address rising living costs and labor shortages. However, it may impact small businesses struggling with profit margins. The new minimum wage will be implemented by each prefecture from October.
CNBC’s Rick Santelli provided insights on the Employment Cost Index data for the first quarter, highlighting the continuing pressures on wage growth and labor market dynamics.
The Bank of Japan (BOJ) is likely to maintain its benchmark interest rate at 0.1% during its upcoming meeting, despite an improved outlook for Japanese wages and a recent decline in the yen. This follows the BOJ’s shift in policy in March, when it raised rates from negative territory for the first time since 2007. However, the central bank remains committed to keeping monetary conditions accommodative in the near term to support economic growth in Japan.
Nevertheless, factors that contributed to the March rate hike remain present, such as expectations of an uptick in Japanese wage growth and inflation. BOJ Governor Kazuo Ueda has hinted at the possibility of further rate hikes this year if wage growth and inflation continue to rise. However, he has also stressed the need for a loose policy in the short term due to the fragility of the Japanese economy.
Recent data indicating resilience in Japanese business activity and a pickup in inflation could prompt the BOJ to raise its inflation outlook for the year. Additionally, the recent weakness in the yen, which hit 34-year highs against the US dollar, may also lead to hawkish rhetoric from the BOJ in an attempt to stem the currency’s slide.
A failure by the BOJ to address the yen’s weakness could expose it to further downside pressure, potentially driving the USDJPY pair beyond 155. Conversely, any hawkish signals from the central bank would likely boost the yen and drag the USDJPY pair away from its highs. However, analysts believe that the recovery in the yen may be limited due to the persistence of higher US interest rates, which have been a major source of pressure on the currency.
According to the London Labour Market Pulse Check, starting salaries in London are rising at their slowest pace since the Covid lockdowns. The survey found that the lowest rate of growth in starting salaries for 37 months. The temporary wage growth figure for London is also well behind the national figure. For permanent roles, wage growth in London is roughly in line with the national average.
