US job growth set to re-accelerate in coming months, Barclays says

The US labour market had softened year-to-date in April, one of the Federal Reserve’s preferred gauges revealed but analysts were sanguine that the rate of growth in payrolls would return to its trend of between 200,000 to 225,000 over coming months.

A fourth successive monthly decline was seen in the Federal Reserve’s Labor Market Conditions Index for April, which a retreat by 0.9 points month-on-month.

Analyst Jesse Hurwitz at Barclays attributed the softening in the LMCI to the retreat in two of the labour market gauges included in the LMCI, the Conference Board’s help wanted online index and the probability of re-employment as contained in the US Department of Labour's household survey.

The former appeared to have peaked in 2015 while the latter had declined of late.

Nineteen indicators linked to the US jobs market were included in the composite LMCI, the analyst said.

However, relative to their historical levels recent declines were “relatively modest” in magnitude, Hurwitz said.

“We expect payroll growth to return to its trend rate of 200k-225k in the coming months. However, given the timing of the June FOMC meeting and the desire of participants to see further evidence of a rebound from soft Q1 GDP growth, we now expect that the Fed will not raise rates until September of this year.”