October 8, 2012
Non-farm payrolls rose by 114k in Sept after a revised +142k in August. Employment increased in healthcare, transportation and warehousing while manufacturing edged down. The unemployment rate derived from the more volatile household survey dropped unexpectedly 0.3pp to 7.8%.
After having risen by 195k per month in the winter-half 2011/12, employment growth slowed to a meagre 120K per month from June to August, reflecting the deceleration in economic growth from 4.1% (qoq, annualised) in Q4 2011 to 1.3% in Q2 2012. The tepid pace of economic growth we are projecting over the next quarters (1.5%-2%) will be insufficient to drive the unemployment rate lower. So, our US colleagues expect the Fed to embark on further monetary policy accommodation. They expect it to match the recently announced MBS QE programme (USD 40 bn per month and USD 30 bn reinvestment of maturing MBS) with a similarly-sized Treasury programme at the start of 2013. However, given the uncertain results of the various QEs and against the backdrop of the origins of the financial crisis such a programme would increase the risk that the Fed might make the same mistake again.
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16.05.2013
