Here are some analyst responses to the labour market report:
ALAN LANCZ, PRESIDENT, ALAN B. LANCZ & ASSOCIATES INC., TOLEDO, OHIO:
“The revised numbers are why the bond market reacted. When yields start increasing that’s going to spook the equity market and that’s why you’re seeing a little pullback from where the futures were before the numbers. “The initial number was pretty much on consensus. But when the revised number came out then people worried that the Goldilocks economy may be threatened here, it may get overheated and we may have to increase interest rates.”
SHAUN OSBORNE, CHIEF CURRENCY STRATEGIST, TD SECURITIES, TORONTO:
“The headline was stronger than the market forecast although we were expecting a higher number after the ADP report. But the revisions in May were certainly positive for the dollar. There is potential for euro/dollar to hit between $1.3550-$1.3450 although I would expect the market to buy euros on dips. As for the outlook on interest rates, I don’t think this changes expectations for the Fed to remain on hold. We still have the housing issue to deal with. It would take a lot to take the Fed out of the sidelines.”
MALCOLM POLLEY, PRESIDENT, STEWART CAPITAL ADIVSORS LLC, INDIANA, PENNSYLVANIA:
“It’s not surprising to have it come in higher than expected. The ADP number came in a lot higher than expected yesterday, most of that strength coming in the service side. The manufacturing side actually had a few more job losses than expected, but still that should give the market some pause if job markets remain quite strong … Average hourly earnings are up 0.3 percent, year over year they’re up 3.9 percent. That give the market some pause if the Fed may have to take action to raise rates sooner rather than lower rates, which is not something that the market really looks for. To the extent interest rates go up, they become even more of a competitor for equity investment dollars.”
STUART HOFFMAN, CHIEF ECONOMIST, PNC FINANCIAL SERVICES, PITTSBURGH:
“The report with revisions is what is catching people’s eyes. The private payrolls is below the ADP. With upward revisions of the past two months and average hourly workweek, the job market is very solid in June and the second quarter. “You have a rise in construction jobs and you still have increases in hospital and government jobs. These are good quality jobs. They go along with income growth. “This also suggests a solid increase in GDP in the second quarter, which could be a 3.25 percent increase. “From the Fed’s point view, it’s still steady as she goes. The Fed is not going to be any less concerned about inflation but it is not going to be any more concerned about it either. It’s a 5.25 percent federal funds rate as far as the eye can see.”
(Source: Reuters)
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