Wage Growth Is Key To Inflation Hints In Upcoming July Jobs Data

Investors will be watching Friday's jobs report for hints about how soon the Fed may tighten interest rates.

While some commentators, like Dallas Fed President Richard Fisher, have recently sounded the alarm about prospects for rising inflation driven by job gains, the smart money so far isn't buying the idea of a quick rate hike.

On Tuesday, Treasury 30-year yields were close to the lowest level in 13 months on expectations the U.S. jobs report Friday will again reveal muted show wage growth, according Bloomberg news service.

The U.S. dollar was also near a six-month high.

Wall Street expect the report will show an added 222,000 new jobs in the last month, down from 288,000. July is likely the sixth consecutive month in which the U.S. has added 200,000 or more new jobs.

Bur Jeffrey Rosenberg, a strategist at Black Rock, says wage growth will be the key to understanding Friday's report.

"Any signs of wage inflation in Friday's report will be critical to the outlook for Fed policy," Rosenberg said in a commentary Monday. "Faster acceleration in wage inflation suggests a faster period of liftoff from zero interest rates."

Wall Street will get an advanced look at employment Wednesday with release of the giant private employment agency ADP's July employment report.

ADP's data have shown slower growth than the Bureau of labor statistics in recent months, according to Bank of America.

ADP is expected to show a slow-down in monthly payroll growth to 230,000 new jobs, from 281,000 in May, according to Bank of America.

Posted In: Analyst ColorNewsEcon #sAnalyst Ratings
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