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Last Updated : Aug 08, 2015 01:02 PM IST | Source: CNBC-TV18

Here's Nariman Behravesh's views on US jobs data

Watch the interview of Nariman Behravesh, Chief Economist at IHS with Surabhi Upadhyay on CNBC-TV18, in which he shared his reading and outlook on US Jobs number.

Watch the interview of Nariman Behravesh, Chief Economist at IHS with Surabhi Upadhyay on CNBC-TV18, in which he shared his reading and outlook on US Jobs number.

Below is the transcript of Nariman Behravesh's interview with Surabhi Upadhyay on CNBC-TV18.

Q: Want to get your sense, how have you read jobs report?

A: I tend to be somewhat upbeat about this report. I think it is certainly not a spectacular report but it is a very solid report. Anything between 200,000 and 225,000 is consistent with the US growth rate of between 2.5 and 3 percent which seems now to be the underlying growth of the US economy.

So, if we are heading that sort of steady pace, that is the point at which the Fed probably will start raising rates and so our take on this is that in fact this job's report does reinforce the case for a September rate hike for the Federal Reserves.

Q: What are the internals that are making you tipped towards September rather than a rate hike in December or perhaps October as the market seemed to be believe in before this report came out today?

A: You have to look at other data as well. For example jobless claims are almost at a four-decade low if you look at things like these business surveys, the purchasing manager survey and the US on the service sector, which accounts for 80 percent of the jobs that the intentions to hire is at a 10-year high.

So it is not just today's report but other indicators as well, other bits of data that suggest that the job market is quite strong. There are some counters, which is to say wages are still very tepid, wage growth is only 2.1 percent year-on-year (Y-o-Y) and the labour force participation rate in the US is at a 38 year low.

So that will give pause to many people in terms of any kind of aggressive rate hikes but we still think they will start probably in September but then proceed very slowly after that.

Q: While the jobs indicators as you discussed and described seemed to be pointing towards decent recovery, what about some of the other key parameters like how the consumer is behaving and the consumer data that we have seen also manufacturing across different regions because we have not had very consistent solid data on some of these parameters, have we?

A: You are absolutely right about that but the way to differentiate is that consumer in US is doing very well even though some of the retail sales numbers have been a little wishy-washy, we expect US consumers spending we think can grow to 3-3.5 percent in the next year or so.

So, the real headwinds, the real problems for the US are in two areas. One, of course, the strong dollar which is hurting US manufacturing and exports and the other of course is the big plunge that has occurred in energy sector investment. Those two have dragged growth down. Without those our guess would be growth would be in the 3.5 range rather than 2.5-3 range.

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First Published on Aug 7, 2015 10:13 pm
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