DWS: Christian Scherrmann comments on the US labour market figures
Christian Scherrmann, US Economist at DWS, comments on the US labour market figures:
'The US labor report report sent a clear dovish message to central bankers. A simultaneous decrease in labor demand and supply usually signals a slowdown in economic activity. While some workers may be discouraged from seeking employment, demographic changes and lower migration rates also play a role.
On the demand side, firms appear to be holding back as they manage higher input prices that are likely more difficult to pass on. Alternatively, they may be reconsidering their needs in light of AI. Through the lens of Fed Chair Kevin Warsh's efficient market pricing philosophy, the initial market reaction suggests that the Fed will likely remain on hold at the next meeting rather than increase policy rates.
Nevertheless, it remains unclear how the new Fed will react to the increasing risk of a stagflation-like situation. The data once again supports our forecast of no change in policy rates this year, but political risk remains.'
