Window for USD strength

Based on other wage indicators, the previous month’s reading of 2.2% looked low compared to the trend in other datasets (more like 2.5%). With that in mind, there is the potential for some more encouraging wage growth figures over the next few months, as pent-up demand in the labour market starts to translate into more rapid pay rises.

After a couple of mixed US labour reports, today’s data was fairly encouraging. Wage growth provided a pleasant surprise to markets, coming in at 0.3% MoM vs 0.2% expectations and taking the year-on-year change up to 2.3%. The rest of the report was fairly in line with expectations - Non-farm payrolls came in a touch above consensus at 215k, roughly around what we believe to be the current underlying trend (around 200k). The unemployment rate ticked back up to 5%, in line with our forecast, although not because of a correction in the household survey measure of employment.