Slow US jobs growth questions early tapering plans

The US created 235K new jobs, drastically worse than the expected 750K. Estimates for July increased by 110K to 1,053K.

The rise in coronavirus cases last month had a visibly negative impact on the pace of labour market recovery.

At the same time, it would be incorrect to speak of a depressed state. Average hourly earnings jumped 0.6% m/m and 4.3% y/y last month.

The high rate of wage growth offsets the negative impact of weak employment growth, strengthening the inflationary spiral and supporting inflation expectations.

In our view, despite the wage data, the weak hiring rate will contribute to pressure on the dollar in the coming days as it creates room for the Fed to take its time in starting the unwinding and postpone the decision until November or December meetings.

The FxPro Analyst Team