Dollar Up but Stocks Down on Larger-than-Forecast Rise in U.S. Jobs
July 5, 2019
The dollar has recorded gains today ranging from 0.2% against the yuan and peso to 0.3% versus the loonie, 0.5% vis-a-vis the euro, 0.6% relative to the yen, Aussie dollar and sterling, 0.7% against the Swiss franc and 1.0% versus the kiwi.
U.S. nonfarm payroll employment jumped 224k in June, 40% more than projected. Labor participation rose 0.1 percentage point to 62.9%, and on-year average hourly earnings growth of 3.1% was not quite as much as one would hope.
With somewhat less confidence regarding a near-term Fed rate cut, share prices are down 0.5-0.6% in the U.S., Germany, France, and Spain. Equity prices closed up 0.2% in Japan and China, but India’s market contracted 1.0% as investors gave Prime Minister Modi’s budget a thumbs down.
The ten-year Treasury yield leaped nine basis points to 2.04%, and its German and British counterparts advanced by four basis points each.
The price of gold tumbled nearly 2% and is below the $1400 per troy ounce threshold. WTI oil dipped 0.2%.
Further evidence of the implosion of Germany’s economy came from May industrial orders in that economy, which tumbled 2.2% on month and 8.6% on year. The weakness that month was concentrated in a 4.3% slump in foreign orders. And although domestic orders for capital goods rebounded in May, the combined April-May level was 4.9% lower than the first-quarter mean.
Three Japanese economic indicators were released Friday:
- International reserves climbed $14.304 billion to $1.322 trillion in June.
- Real household spending posted the largest on-year increase (4.0%) in four years during May.
- The preliminary estimate of the index of leading economic indicators fell again in May, reaching its lowest level since December 2012. However, the index of coincident economic indicators advanced to a 7-month high, eliciting an upgrade in officials’ trend assessment from “worsening” as in March-April to “halting to fall.”
The British Halifax house price index slipped 0.3% on month in June but posted a higher 5.7% on-year rise in 2Q19. British unit labor costs in the first quarter of 2019 were 2.1% higher than a year earlier.
The French current account was in surplus in May (EUR 343 million) for the first time since December. A trade deficit that month of EUR 3.278 billion was the smallest since the final month of 2017.
Austrian wholesale prices recorded their largest on-year decline in June (1.6%) in 33 months.
Filipino CPI inflation of 2.7% in June was down four percentage points from 12-month increases last September-October and the lowest in 22 months.
Robust May industrial production data were reported for three European economies. Compared to a year earlier, IP went up 6.3% in Ireland, 8.7% in Hungary, and 10.5% in Denmark. But industrial production was 2.5% lower than a year earlier in Norway and just 1.4% higher in Spain. Spanish consumer confidence, on the other hand, improved to a 10-month high in June.
Unlike U.S. labor market data, Canada’s monthly labor force survey was not as good as hoped. The unemployment rate rose 0.1 percentage point to 5.5%, and the number of jobs contracted by 2.2k due to a 41.4k shrinkage of self-employment. Average hourly earnings in Canada surpassed the year-earlier level by 3.6%.
Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: German industrial orders, Japanese household spending and index of leading economic indicators, U.S. and Canadian labor market statistics
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