VGSH - Slowing U.S. Employment Costs Offer More Hope For Interest Rate Cuts

2024-01-31 18:20:00 ET

Summary

• Employment costs are cooling broadly despite the tight jobs market.
• Cooling labour cost environment offers the Fed the room to cut interest rates meaningfully to neutral levels.
• Employment costs rose 0.9% quarter-on-quarter in 4Q versus 1.1% in 3Q23, and below the 1% consensus prediction.
• The current consensus for non-farm payrolls is 185k, with the most optimistic forecaster in Bloomberg’s survey predicting 296k.

Employment costs are cooling broadly despite the tight jobs market. Nonetheless, with the quit rate falling, it suggests the jobs that are on offer are not especially attractive, implying less incentive to pay more to retain current staff. This cooling labour cost environment offers the Fed the room to cut interest rates meaningfully to neutral levels. ...

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