US Economic Update: June 2016

March quarter GDP growth was only 0.8% qoq annualised. However, at this stage it looks like GDP growth has strengthened in the June quarter.

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Key Points:

  • The dramatic slowdown in jobs growth in May casts doubt on the labour market.
  • However, partial indicators suggest GDP growth has strengthened in the June quarter.
  • We expect that the May employment report is an outlier. If this proves to be the case then Fed rate hikes are still likely; with July or September the most likely dates.

Through the weakness in March quarter GDP, one of the reassuring trends was the strength in jobs growth. However, even as June quarter GDP is showing signs of accelerating, confidence in the labour market outlook has plunged following the May employment report.

For further details please see the attached document