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  Click to listen highlighted text! The Federal Reserve is likely to keep hiking interest rates – including at its next June meeting – and the latest labour market report is in line with this view. Last week, the Fed did only minor adjustments in its policy statement, recognizing that both headline and core inflation ‘moved close’ to 2% on a 12-month basis.Also, adding that future inflation may run around the FOMC Committee’s ‘symmetric’ 2% objective was interpreted by many as a dovish policy signal. We disagree, noting that the inclusion of the word ‘symmetric’ is a clarification of existing policy. As to the labour market, latest numbers point to less slack.Not only did the U3 unemployment rate fall to 3.9% only – a low since 2000 – but the larger U6 measure also dipped, to 7.8%, a low since 2001. April net job growth of nearly 170k is still far above the 100k needed to balance demographic growth. Looking at sectors, we note that employment in the manufacturing sector improved significantly, with the sector adding 24k jobs last month. Gero Jung - Chief Economist - Mirabaud AM

The Federal Reserve is likely to keep hiking interest rates – including at its next June meeting – and the latest labour market report is in line with this view.

Last week, the Fed did only minor adjustments in its policy statement, recognizing that both headline and core inflation ‘moved close’ to 2% on a 12-month basis.

Also, adding that future inflation may run around the FOMC Committee’s ‘symmetric’ 2% objective was interpreted by many as a dovish policy signal. We disagree, noting that the inclusion of the word ‘symmetric’ is a clarification of existing policy. As to the labour market, latest numbers point to less slack.

Not only did the U3 unemployment rate fall to 3.9% only – a low since 2000 – but the larger U6 measure also dipped, to 7.8%, a low since 2001. April net job growth of nearly 170k is still far above the 100k needed to balance demographic growth. Looking at sectors, we note that employment in the manufacturing sector improved significantly, with the sector adding 24k jobs last month.


Gero Jung - Chief Economist - Mirabaud AM

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