US has seen a steady run of downbeat releases since the turn of the year, culminating in this week's 0.2% (saar) Q1 GDP print. Some of this softness reflected poor weather and strike activity. Like the FOMC, Lloyds Bank anticipates a Q2 rebound.
Despite the ISM manufacturing index for April remaining stable at 51.5, its forward-looking components, such as new orders, point to pickup in activity. April's labour market figures (Fri) are set to offer another soothing exhibit. Lloyds Bank expects payrolls to rise by 220k (alongside a possible upward revision to last month's 126k outturn), with the unemployment rate edging down to 5.4% from 5.5% in March.
This tightening of the labour market should underpin a rise in annual pay growth from 2.1% to 2.4% which would be the fastest pace since August 2009. Such a pickup would chime with the 0.7% Q1 climb in the employment cost index and support the Fed's expectation of inflation rising back to target over the medium term.
