This is why the level of wage growth in the economy is closely watched by central banks as they ponder whether to cut interest rates.
It is in this context, Miller says the labour market is slowing, but this is a positive in the context of reducing wage pressures.
He says: “At the peak, there were two available jobs for every unemployed worker in the US, whereas now its 1.2 jobs per worker, and that is probably a Goldilocks scenario, as the softening conditions should mean wage pressure eases.
Miller says: “The US Federal Reserve may take the view that the plan is working, the aim is being achieved when they see those labour market changes, and in that scenario interest rates can be cut. But the challenge is that one can’t be complacent about labour market conditions – they can deteriorate very quickly.”
Boucher is slightly more optimistic on the prospects for the US economy, based on inflation falling, but also feels that some parts of the data are lagging, and as these data points catch-up he feels the inflation picture may be less clear, and investors may have to wait for rate cuts.
He says that with services performing well, and consumption performing well, this is the bulk of where US GDP comes from.
Ronald Temple, chief market strategist at Lazard, says the most recent data around the US jobs market strengthens the case for a rate cut.
He says: “The evidence supporting the case for Fed easing in September has strengthened. Unemployment remains low, but has nudged above 4 per cent for the first time in 30 months. Job creation is robust, but has slowed to 177k per month in the last quarter. And wage growth exceeds inflation but is near levels that would allow for achieving 2 per cent inflation.
"Overall, it’s a Goldilocks labour market that is neither too hot nor too cold and doesn’t warrant such restrictive monetary policy."
Are rate cuts needed?
Isabel Albarran, investment officer at Close Brothers Asset Management, says: “US monetary policy remains key for markets and the June employment report provided further support for the case for interest rate cuts.
"While non-farm payrolls came in above expectations at 206,000, this was a deceleration from May and there were significant downward revisions to the April and May figures. Furthermore, strength in employment came from the government sector, as opposed to private payrolls, which were soft at 136,000.
"The household survey, which is used to estimate the unemployment rate, also continued to paint a softer picture, indicating a rise in employment of 116,000 after a 408,000 decline in May.
