Economics & Growth | Europe | Monetary Policy & Inflation
Dom’s Weekly: Data Riddles Mask Labour Market Strength
- By Dominique Dwor-Frecaut
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- 10 min read
Summary
- Total hours worked are slowing, but this reflects the normalisation of employment growth and an increase in individual workers’ hours during the pandemic.
- The widening shortfall of household surveys relative to establishment survey employment is largely a payback for excesses in the early stages of the pandemic.
- A detailed analysis of the shortfall suggests continued fast wage growth.
Market Implications
- The market is underpricing inflation risks and the terminal FFR, as well as overpricing 2023 rate cuts.
Summary
- Total hours worked are slowing, but this reflects the normalisation of employment growth and an increase in individual workers’ hours during the pandemic.
- The widening shortfall of household surveys relative to establishment survey employment is largely a payback for excesses in the early stages of the pandemic.
- A detailed analysis of the shortfall suggests continued fast wage growth.
Market Implications
- The market is underpricing inflation risks and the terminal FFR, as well as overpricing 2023 rate cuts.
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