Daily Economic Outlook: 5th June, 2015

Today's payrolls report will as usual be seen as probably the number one monthly indicator for the US. Indeed, the Fed's identification of further labour market improvement as one of the key preconditions for a hike in interest rates has, if anything increased its importance. Recent comments from Fed officials have suggested that a June interest rate hike is now unlikely but a move in September remains on the cards providing the data shows economic growth rebounding from its Q1 fall. This week's economic data have so far mostly been consistent with a decent pickup and markets will be watching closely to see if that is also true of payrolls, says Lloyds Bank. 

Most alternative indicators suggest that the labour market has continued to tighten in May. In particular, initial jobless claims fell to a new recovery low. 

"A 230k rise in employment, which would be the largest since February, while the unemployment rate is forecast to be stable at 5.4%, and earnings growth is expected to pick up modestly to 2.3%. Such an outcome is unlikely to be enough to revive the possibility of a June rate move, but it would probably leave a majority on the FOMC in favour of a tightening in the second half of 2015", according to Lloyds Bank.

It is otherwise a quiet day for data releases. The second estimate of Q1 euro area GDP growth is forecast to be unchanged from the initial print, adds Lloyds Bank. However, further detail on recent expenditure trends will be provided. Later in the day New York Fed President Dudley is scheduled to speak. As an influential dovish voice on the FOMC, his views will be of great interest.