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This is the metric to watch for in Friday's jobs report

The key number to watch for Federal Reserve implications: wage growth.

This is the metric to watch for in Friday's jobs report

Despite still-weak global data, the employment picture in the United States has remained strong. And Friday’s jobs report is expected to be solid, with non-farm payrolls expected to come in at 200,000.

But the key number to watch for Federal Reserve implications: wage growth.

U.S. economic data lately--including Wednesday’s ADP report--have tempered expectations, but wage growth holds the keys that could reveal signs of inflation.

While a tightening job market typically prompts earnings growth, wage gains have been tepid. Average hourly earnings rose 2.3% year-over-year in March.

This month, we could see some more upward wage pressure, according to Deutsche Bank’s chief international economist, Torsten Slok.

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“The economics is that we are getting closer and closer to full capacity so it should not be a surprise if we begin to see more upward pressure on wages,” he said.

April could in fact reflect even more robust wage growth, according to Slok. And if it’s strong enough, the market could react negatively as it would indicate a move closer to the Fed’s 2% inflation target and the potential for a rate increase sooner.

In the household survey, the reference period is generally the calendar week that contains the 12th day of the month. Given that workers are normally paid on the 15th, it becomes important if the 12th is in the beginning of the week or at the end of the week. Since the 12th is on a Tuesday, as it is in Friday’s report for April 2016, the reference week includes the 15th, which could create an upward bias to the wage number reported.

According to Slok, wage growth tends to be higher when the reference week for the employment report (ie the 12th) falls on a Monday, Tuesday or Wednesday.