Expect more US interest-rate rises

America's labour market is starting to look "drum tight", as David Rosenberg of Gluskin Sheff puts it. Payrolls expanded for the 91st month in a row in April, gaining another 164,000 people. The unemployment rate slipped to 3.9% from 4.1% in March.

The last time it edged below 4% was in 2000, at the peak of the dotcom boom; the previous occasion was January 1970. Average hourly earnings barely rose in April, however, climbing by 0.1% and keeping the annual pace of growth at 2.6%.

But subdued wage growth is unlikely to be with us for much longer. Average hourly earnings are the "laggiest of the most lagging inflation indicators", says Rosenberg. The average also conceals the fact that high-earning baby boomers are gradually leaving the workforce and being partly replaced by lower-paid entry level workers whose pay is now accelerating, according to surveys of job offers available for graduates.

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The number of workers voluntarily leaving their jobs, moreover, is historically high, reflecting growing confidence among employees. And the wider U-6 measure of unemployment, including part-time workers who would like a full-time job and discouraged workers who have not sought a job in the past four weeks, is at a 17-year low of 7.8%. Add this all up, and the odds of the US Federal Reserve having to hike interest rates quickly because they will be taken by surprise by inflation are rising.