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05 July 2017

Quincy Krosby: Monthly jobs report may show if cycle of inflation is gaining momentum

The monthly unemployment report out Friday has the potential to move markets as traders look for data to support the Federal Reserve’s plan to continue interest rate hikes, Prudential’s Chief Market Strategist Quincy Krosby said in her weekly “Connecting the Dots’’ outlook.

After a disappointing report last month when a less-than-expected 138,000 jobs were created, consensus estimates for June are for 155,000 to 160,000 new jobs, Krosby said. The report also will show where the new jobs are concentrated and whether wages are moving higher. This is important as the Federal Reserve looks for such signs of increasing inflation as it continues on a trajectory to normalize interest rates, she said.

“Remember, they are not at their target of 2 percent inflation, and one of the most important catalysts of higher inflation is when wages move higher,’’ Krosby said.

The ADP National Employment Report released Thursday morning said private industry created 158,000 jobs from May to June, below expectations. The report, which historically is not a perfect predictor of the government’s broader employment number, may help the market get an idea of what might be in store from Friday’s government data.

“The ADP report is important, but we have to remember that the big number is coming out Friday,’’ she said.

In other potentially market-moving reports the rest of this week, on Wednesday, the minutes of the most recent Federal Open Market Committee meeting will be released. While little news is expected from this, the market is looking for any morsel that may run counter to or support the Fed’s plan to continue raising interest rates, Krosby said.

To talk to Quincy about her views as this week’s markets news unfolds, contact Lisa Bennett or Dara Scerbo.

Read Quincy Krosby's full Q2 Market Commentary: Tug of War

 
Contact(s):
Lisa M. Bennett
phone: 973-802-2894
 Dara Scerbo
 phone: 973-367-9318

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