(June 2 – 11:45 ET) – Analysts and traders alike were surprised with this morning’s U.S. labour report — causing some of them to rethink their view on interest rates.
Economists at BMO Nesbitt Burns Inc. almost rejoice, “Almost every aspect of this release shouts slowdown.”
CIBC World Markets concurs, noting, “Sometimes the data all point one way, and that was the case in the report on U.S. labor market… this was an unambiguously soft set of numbers.” Not only was employment down, but wages slipped too. “A source of comfort for those fearing a rise in core inflation,” says CIBC.
These numbers have analysts shifting their views. CIBC says, “We’ve seen this before. Sometimes a soft month or two is nothing more than a headfake amidst a strong growth trend. But the data are weak enough to challenge our call for 4% second quarter growth.”
CIBC, BMO Nesbitt and Merrill Lynch are now calling for the U.S. Federal Reserve Board to leave rates unchanged in June, until more data clarifies the picture. However in an election year, some analysts think August is too long to wait to move.