The Weekly Wrap – U.S. Labor Market Data Turns Global Financial Markets
Outside the United States
It was a quiet start to the week, with US markets closed in recognition of Memorial Day on Monday.
On Tuesday, the ISM manufacturing PMI fell from 60.7 to 61.2, supporting market optimism towards the economic outlook.
Markets then had to wait Thursday and Friday for the week’s key statistics.
The development of ADP’s nonfarm employment and weekly jobless claims were the focus, along with the market’s preferred non-manufacturing ISM figures for May.
In May, the non-farm payroll jumped by 978,000 according to the ADP, well ahead of an expected increase of 650,000. In April, the non-farm payroll had increased by 654,000.
The initial jobless claims figures also impressed. In the week ending 28e In May, initial jobless claims fell from 405,000 to 385,000. Economists had forecast a drop to 390k.
The services sector PMI figures were also positive, with the ISM non-manufacturing PMI falling from 62.7 to 64.0. Economists were forecasting an increase to 63.0.
At the end of the week, it was a different story, however.
Non-farm payrolls only increased by 559,000 in May, well below ADP figures. Economists had forecast an increase of 650,000 after April’s modest rise of 278,000.
A fall in the participation rate and an increase in the wage bill have supported a fall in the unemployment rate.
In May, the US unemployment rate fell from 6.1% to 5.8%. However, this was not enough to mitigate the impact of the disappointing NFP figures…
In equity markets, the NASDAQ rose 0.48%, with the Dow Jones and the S & P500 posting gains of 0.66% and 0.61% respectively.
Outside the UK
It has been a relatively quiet week, with the finalized private sector PMIs finalized for May.
The statistics were mixed during the week. In May, the manufacturing PMI fell from 60.9 to 65.6. Although up from April, it was down from a preliminary of 66.1.
Services sector PMI figures provided support for the pound on Thursday.
In May, the services PMI index fell from 61.0 to 62.9, against 61.8.
Friday’s construction PMI figures were also out, but had a moderate impact on the pound.
While statistics were positive for the pound, concerns over new strains of COVID-19 identified in the UK weighed on the pound.
During the week, the pound fell 0.22% to end the week at $ 1.4157. The week before, the pound had risen 0.27% to $ 1.4188.
The FTSE100 ended the week up 0.66%, after rising 0.06% from the previous week.
Outside the euro zone
The private sector PMIs and unemployment and retail sales figures in Germany and the Eurozone were the focus of attention.
Earlier this week, the PMI manufacturing data for May impressed. The eurozone’s PMI hit a new record. The Netherlands, Italy, Ireland and Austria also set records during the month.
Unemployment figures were also positive. In April, the euro area unemployment rate fell from 8.1% to 8.0%. In Germany, unemployment fell 15k more than expected to leave the unemployment rate unchanged at 6.0% in May.
By midweek, retail sales figures in Germany were disappointing, however, with sales down 5.5% in April. In March, retail sales increased 7.7%.
In the 2sd half of the week service sector activity and euro area retail sales figures were the focus of attention.
For the month of May, the euro area composite PMI index stood at 57.1. This is up from 53.8 in April and 56.9 preliminary.
At the end of the week, Eurozone retail sales figures had a moderate impact on the euro following weak figures from France and Germany.
On the week, the euro fell 0.21% to $ 1.2167. The previous week, the euro had risen 0.08% to $ 1.2192.
The DAX30 rose 1.11%, the CAC40 and EuroStoxx600 ended the week up 0.49% and 0.78% respectively.
For the loonie
It has been a busy week. At the start of the week, the GDP figures for the 1st quarter were the center of attention.
On a monthly basis, the economy grew 1.1% in March, beating the 1.0% forecast. In February, the economy experienced more modest growth of 0.4%.
Quarter-on-quarter, the economy grew again by 1.4%, following growth of 2.2% in the 4e quarter of last year.
At the weekend, the Ivey PMI and employment figures were in the spotlight.
In May, the unemployment rate fell from 8.1% to 8.2%, driven by a 68k drop in employment. In April, employment had fallen by 207.1k.
Halfway through 2sd quarter, however, the Ivey PMI provided some support. In May, the Ivey PMI fell from 60.6 to 64.7.
Other statistics included the current account, RMPI and building permit numbers which had a moderate impact on the loonie.
In the week ending 4e In June, the loonie slipped 0.07% to C $ 1.2084. During the previous week, the loonie had fallen 0.08% to C $ 1.2076.
It has been a mixed week for the Australian dollar and the Kiwi dollar.
In the week ending 4e In June, the Australian dollar rose 0.35% to $ 0.7739, while the Kiwi dollar fell 0.50% to $ 0.7214.
For the Australian dollar
It has been a busy week.
Gross operating profit of the company, 1st The quarter’s GDP and trade figures were key statistics for the week.
Gross operating income fell again by 0.3% in 1st quarter, after a decrease of 4.8% compared to the 4e trimester.
On the bright side, however, the GDP and trade figures were better than expected.
In the 1st quarter, the Australian economy grew 1.8%, beating the 1.1% forecast. In the 4e quarter, the economy grew 3.1%. Year on year, the economy grew by 1.1%. In the 4e quarter, the economy contracted 1.0%.
In April, the trade surplus widened from A $ 5.574 billion to A $ 8.028 billion, also positive for the Aussie.
Final retail sales figures were also released and were in line with preliminary figures, claiming a 1.1% increase in April.
As the statistics were biased towards the positive, the RBA weighed on the Australian dollar on Tuesday.
True to its monetary policy, the RBA has maintained its policy outlook, providing for a suspension of policy until 2024 at the earliest.
For the Kiwi Dollar
It was a quiet week.
Business confidence and obtaining consents were central concerns.
In May, business confidence improved, with the ANZ Business Confidence Index falling from -2 to 1.8. However, this was a 5 point drop from a preliminary of 7.0.
Building permits continued to increase in April, with permits up 4.8% after rising 19.2% in March.
For the Japanese yen
It was a busier week.
Industrial production, retail sales, capital spending and household spending were the focus of attention.
The finalized private sector PMIs for May also sparked interest.
The statistics were biased towards the positive during the week.
Retail sales and household spending provided some comfort. Retail sales rose 12% in April, with household spending increasing 0.1% on the month. Economists had forecast a drop of 2.2% in household spending.
Industrial production rose another 2.5%, after an increase of 1.7% in March, also positive.
Capital spending disappointed, however, falling 7.8% in the 1st trimester. In the 4e quarter, spending fell by a more modest 4.8%.
Private sector PMIs delivered mixed results during the month, with the services sector struggling.
In May, the services PMI index fell from 49.5 to 46.5, compared to 45.7 previously. An increase in new COVID-19 cases weighed on service sector activity in May.
The manufacturing sector continued to grow, however, with the PMI falling slightly from 53.6 to 53.0. That was up from a preliminary of 52.5.
The Japanese yen rose 0.30% to 109.52 yen against the US dollar. During the previous week, the yen had fallen 0.82% to 109.85.
Outside of china
The private sector PMIs for the month of May were out.
It was a mixed set of numbers, however.
The NBS manufacturing PMI slipped from 51.1 to 51.0, while the non-manufacturing PMI fell from 54.9 to 55.2.
It was a different story for the market’s favorite Caixin numbers, however. The manufacturing PMI fell from 51.9 to 52.0, while the services PMI fell from 56.3 to 55.1.
In the week ending 4e In June, the Chinese yuan fell 0.42% to CNY 6.3953. The previous week, the yuan had risen 1.02% to CNY 6.3685.
The CSI300 and Hang Seng ended the week down 0.73% and 0.71% respectively.