Tags: Greene | slack | labor | market

John Hancock's Greene: 'There's a Lot of Slack Left in Labor Market'

By    |   Monday, 09 March 2015 01:04 PM

 
Most economists spoke glowingly of the February jobs report that was released Friday, but not everyone.
 
The unemployment rate slipped to 5.5 percent last month, its lowest level since May 2008. And non-farm payrolls rose 295,000, marking the 12th straight month with a gain of at least 200,000. That's the longest such streak since 1995.
 
Typical of analysts' reaction was this from Rick Rieder, co-head of Americas fixed income at BlackRock. "The breathtaking strength in job creation witnessed in recent months continues apace," he told The Wall Street Journal. "All signs point to the Fed beginning its normalization of rates" by September.
 
Economists' consensus is that the Fed will start raising interest rates around mid-year. It has kept its federal funds rate target at a record low of zero to 0.25 percent for six years.
 
But average hourly wages rose only 2 percent in the 12 months through February. And the labor participation rate totaled just 62.8 percent last month, barely above the 37-year low 62.7 percent.
 
That left question marks for some economists. "There is a lot of slack left in the labor market," Megan Greene, chief economist at John Hancock Asset Management, told The Journal. "As long as you don’t have upward pressure on wages, you won’t have upward pressure on inflation."
 
Consumer prices fell 0.1 percent in the year through January. The Fed has an inflation target of 2 percent, and its favored inflation gauge, the personal consumption expenditures price index, rose a mere 0.2 percent in the 12 months through January.
 
New York Times columnist Neil Irwin sees the February data as a mixed big. "On one hand, the results on job creation and the unemployment rate were about as good as one might hope for," he writes.
 
But, "on the other hand, the lack of progress on wages and lack of progress in pulling people into the labor force give plenty of ammunition to those who believe that there remains plenty of slack in the labor market."
 
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Most economists spoke glowingly of the February jobs report that was released Friday, but not everyone. The unemployment rate slipped to 5.5 percent last month, its lowest level since May 2008.
Greene, slack, labor, market
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2015-04-09
Monday, 09 March 2015 01:04 PM
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