Financial market traders and their media equivalents get all excited about this data, but it is subject to potentially significant revisions each month so for us with longer-term time horizons we should really be focusing on the longer term trends.
However, if the US Federal Reserve and the Bank of Canada are basing their next stage of monetary policy on the trend (and wage growth is the key component) then we do have to pay attention to data that may impact the decision making process.
In the context of our theme that their is a structural shift in consumer spending occuring, wage growth is interesting from the perspective of :
Todays reports really did not show any significant change:
In the US non-farm payrolls rose by 215,000 (slightly less than expected) and revisions to previous months were slightly higher.
Year over year wages in the US grew by 2.1%, below expectations. Labour force participation remained at the lowest level since 1997 at 62.6%.
Inflation (or lack thereof) was at the forefront of the Bank of Englands decision to hold rates steady yesterday.
Central bankers globaly are concerned about the lack of inflation growth.
The US Federal Reserve will not be an exception.
In Canada, small growth in employment and no change in unemployment will likely not change the BOC's current thinking.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist