US April jobs report - Analysts react

"The Fed is a lock to raise rates at its June meeting. The unemployment rate continues to fall below its long-run estimate and is placing upward pressure on wages – an acceleration in wages could be close. The Fed is firmly on a policy normalization track and wants to get rates up to more normal levels, especially given prospects for fiscal reform and its potential to boost the economy." - Roiana Reid at Berenberg Capital Markets

"The number released today is more than twice the March increase and this has provided much aid for the monthly average. The biggest surprise for investors in this report is your big drop in jobless rate to 4.4 % but there is one cloud here, the participation rate has fallen. Trump administration has made a big fuss about the participation rate and given that this rate has dropped even further, investors have the right to know what Trump’s administration will do to address this problem. Nonetheless, the data has shown that the there is a momentum in the economy and the recovery in the US economy still has strong legs to stand on." - Naeem Aslam, chief market analyst at Think Markets UK

"Following March’s surprisingly low non-farm payroll reading, both President Trump and Janet Yellen will be pleased to see it bounce back significantly in April. There have been a few bumps in the road for the Fed to navigate in recent weeks, but these are expected to smooth out in time. Low levels of productivity growth is perhaps the biggest concern, although economic confidence remains high within the business community. It clearly hasn’t been plain sailing for the Fed, but the US economy still appears to be on the right path and a further two interest rate hikes this year remains the most likely scenario." - Dennis de Jong, managing director at UFX.com

"We've had another mixed jobs report from the US today that will likely do nothing to either encourage or deter the Fed when it comes to deciding whether to raise interest rates next month. Arguably the most important aspect of the report was wage growth given that the Fed has all but achieved its full employment mandate but continues to fall a little short on inflation. With the Fed pinning their hopes on a tighter labour market spurring higher levels of wage growth – which is still far from reaching the levels prior to the financial crisis – traders are understandably a little underwhelmed today. Wages grew by only 2.5% compared to last year, remaining stubbornly around the levels we’ve seen over the last year." Craig Erlam, senior market analyst at Oanda

"The unemployment rate fell to a decade low of 4.4%, from 4.5%, as a 156,000 increase in the household survey measure of employment comfortably exceeded the modest 12,000 increase in the labour force. The broader U6 measure of unemployment fell to a decade low of 8.6%, from 8.9%. Adding to the good news, average hourly earnings increased by a solid 0.3% m/m last month, although base effects pushed the annual growth rate down slightly to 2.5%, from 2.6%." - Paul Ashworth, chief US economist at Capital Economics

"The month-to-month numbers are unreliable, but what will get the Fed's attention is that the unemployment rate has fallen from 4.8% in January to 4.4% just three months later, leaving it below the bottom of the Fed's Nairu range, 4.7-to-5.0%, and still falling. [...] Given the long lags between rate hikes and shifts in labor market conditions, Fed hawks will now be even keener to see rates rise further, despite the levelling-off in hourly wage growth in recent months. The y/y rate, three-month average, has been 2.7% for the past nine months. They will argue - correctly, in our view - that all the risk is to the upside and the Fed cannot base policy on the hope that wages will somehow fail to re-accelerate even as the unemployment rate approaches 4%. The June hike is more or less done, but we think markets hugely underestimate the risk for Sep, when we expect the Fed to hike again." - Ian Shepherdson, chief economist at Pantheon Macroeconomics

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