Strong US data but no rush to hike rates


Ian Kernohan, Economist

5 August 2016

Following the disappointing US GDP figure for Q2, today's payroll report should calm nerves that the US is suffering any appreciable slowdown. Employment is growing at a robust pace, which would not be the case if the economy was in recession, as many commentators were claiming earlier in the year. 

The unemployment rate remained flat at 4.9%, and while wage growth has picked up in recent months, there is little sense that labour costs are pushing up domestic inflationary pressures.  I believe the US Federal Reserve can afford to wait until after the November election before hiking interest rates again.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.