Central Banks

Friday, June 2, 2017 - 12:45

Phil Fed's Harker: May Payrolls at 138K 'A Good Number'


--Upward Pressure on Wages 'Starting to Assert Ttself'
--100K Payrolls/Month to be 'More Than Sufficient;'

NEW YORK (MNI) - Philadelphia Federal Reserve Bank President Patrick Harker Friday said the increase of 138,000 in the morning's jobs report "is a good number" and, going forward, job creation need not be as strong as in the past few years.

In remarks prepared for the Pennsylvania Economic Association annual conference, Harker said that he sees the unemployment rate, down a tenth to 4.3% in May, slipping another tenth by "the end of next year."

"I see very little slack left in the labor market," he said. Harker is a current Federal Open Market Committee voter. "Job creation is still very strong" and he said he sees it slowing "to about 100,000 a month by the end of 2019."

"I think we need to put job growth in context," he continued. "In the very near future, we're not going to need to create jobs at the intense pace we've been experiencing over the past few years."

Creating 100,000 jobs a month "is going to be more than sufficient to keep up with population growth," Harker went on. "That's more or less the rate we'll need in a normal, healthy economy."

Over-the-year wage growth through May was 2.5% and Harker said, "Upward pressure on wages is finally starting to assert itself." He estimates the annual increase in wages will be between 2.5% and 3% the rest of the year.

Otherwise Harker repeated what he said in New York 11 days ago, at a Market News International event, that he still sees "three rate hikes of 25 basis points each as appropriate for 2017." He had said then he sees a June hike as "a distinct possibility" and that he would like this year's two remaining hikes to be "paced out."

Harker said Friday all his remarks were "predicated on the assumption that things continue to unfold as they have been," an economy "more or less at full health."

"The small adjustments that need to be made here and there are not earth-moving numbers, they're just needed to ensure that the foundation is strong," he said, with his forecast for GDP this year a 2.3% increase as the Fed achieves its 2% inflation goal "around the end of the year."

--MNI Washington Bureau; tel: +1 202-371-2121; email: denny.gulino@marketnews.com

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