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Wednesday, July 12, 2006

US payroll data supports rate hike in August

By Yaser Anwar, CSC of Equity Investment Ideas

Analysts at ING Financial Markets say that while the recent US payroll data supports a Fed rate hike in August, it reduces the possibility of further hikes.

In a research note published this morning, the analysts mention that US payrolls rose by merely 121,000 in June. The analysts add, however, that the average hourly earnings growth rate rose to 3.9% in June, from 3.5% in May, fueling concerns over second-round inflation pressures. This supports the case for the Fed raising interest rates at its August meeting, ING Financial Markets says.

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