Eye on U.S. Jobs Data and Greek Debt Melodrama

June 3, 2011

Markets got the bad U.S. jobs report they had feared. 

  • Jobs climbed only 54K, a third of expectations, and March and April figures were revised downward by a combined 39K.
  • Non-farm payroll jobs were merely 242K greater than a year earlier.  That’s a rise of 0.2%.
  • Unemployment increased to 9.1% from 9.0% in April and 8.8% in March.  The broadest gauge of un- and underemployment stood at 15.8% in May.
  • Private jobs went up 83K, down from gains of 251K in April and 219K in May.
  • The 34.4 hour average work week was unchanged in length from April.
  • Factory jobs contracted 5K.
  • Average hourly earnings rose 0.3% on month and 1.8% on year.

Markets still await what the EU, IMF and ECB decide to announce about a new bailout for Greece and the results of the U.S. service-sector purchasing managers survey.

The dollar hit lows today of $1.4533 per euro, CHF 0.8350, and JPY 80.05.  On balance, it shows losses of 0.1%, 0.6% and 0.9% against those three hard currencies from Thursday’s close.  In contrast, the greenback has risen 0.9%, 0.8% and 0.5% relative to the Canadian, New Zealand and Australian dollars.  The dollar also gained 0.3% against sterling.  The yuan is marginally weaker than 6.48 per dollar.

Equities lost a further 1.3% in Hong Kong, 0.7% in Japan, 0.6% in India, and 0.4% in Australia, but they rose 1.0% in China.  The Paris Cac, German Dax and British Ftse show losses of 0.9%, 0.5%, and 0.7% so far.

Oil fell 1.6% to $98.84 per barrel.  Gold edged up 0.2% to $1535.60 per ounce.

The yields on ten-year British gilts and German bunds fell two basis points each.  That on Treasuries slumped seven basis points to 2.96%.

The final euro area composite and service-sector purchasing manager survey results for May were revised up by 0.4 and 0.6 points to 55.8 and 56.0.  The service PMI was 0.7 below April’s level and at a 4-month low.  The composite index was 2.0 points lower than in April and at a five-month low.  The data imply a second-quarter GDP growth rate that is decent but somewhat lower than achieved in the first quarter.  Momentum is slowing, and some members are flirting with recession.

The Italian and Spanish service PMI scores were 50.1 and 50.9, down 1.1 points and up 0.5 points compared to April.  Italy had the biggest contraction of new orders since July2010.  Ireland’s service sector PMI was 50.5 after 50.2 in April, but both its orders and jobs components swung below the 50 no-change line.

The German composite and service PMI readings of 57.1 and 56.1 were higher than their preliminary values but down from 59.2 and 56.8 in April. 

The French composite and service PMIs were revised down by 0.2 and 0.3 points to 60.3 and 62.5.

Britain’s service-sector PMI weakened to 53.8 from 54.3 in April and was softer than anticipated.  Second-quarter GDP growth will be slower than the 1Q result.

Japan’s service-sector purchasing managers index recovered to a still-weak 43.8 from an earthquake-devastated score of 35.0 in April.

Australia’s services PMI moved into contraction territory with a sub-50 reading of 49.9 after 51.5 in April.  The jobs component plunged 9.4 points.

The Russian services PMI of 57.6 after 55.8 in April offset a weaker manufacturing reading and left the composite PMI unchanged at 55.4.

News that China’s 54.3 services PMI (a 7-month high) and better 52.8 composite reading after 51.7 in April helped lift China’s stock market.

The Hong Kong PMI slid to 52.2 from 52.9.

India’s services PMI fell 4.2 points to 55.0 and showed the weakest business expectations component since last July.  The composite PMI printed at 57.7, down from April’s 60.7.

Turkish consumer prices leaped 2.4% on month in May and accelerated to a 12-month 7.2% advance from 4.3% in April.  Producer prices firmed 0.2% on month and rose 9.6% on year.

Spanish consumer confidence improved to 74.3 last month from 73.2 in April.  Finnish GDP rose 0.8% in 1Q and was 5.5% greater than a year earlier.

Brazilian GDP increased 1.3% in the first quarter of 2011 and surpassed its year-earlier level by 4.2%.

Copyright Larry Greenberg 2011.  All rights reserved.  No secondary distribution without express permission.

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