U.S. Jobs Statistics to Dominate this Friday Session

October 2, 2015

Ninety minutes ahead of the U.S. labor force report, the dollar shows small gains of 0.3% against the yen and 0.2% relative to the euro and Swiss franc.  The U.S. currency is unchanged against the Australian dollar and down 0.1% versus the loonie, kiwi and sterling.

Analysts look for U.S. employment growth in September of 200K or slightly less.  Much attention will be focused upon whether the jobless rate of 5.1% in August dipped even further and how wages performed.  In August, hourly earnings rose 0.3% on month and 2.2% on year.  U.S. motor vehicle sales reported Thursday amounted to a robust and greater-than-forecast 18.17 million annualized.

San Francisco Fed President John Williams late yesterday become the latest monetary officials to predict that the federal funds rate will be raised later this year.  FOMC decisions are due on October 28 and December 16.  If policymakers fail to do the act in October, a 7-week interval would ensue in which policy is boxed into a corner.  If officials are as confident of acting before yearend as the rhetoric implies, they might as well remove the element of uncertainty to do it on October 28.

Share prices advanced 3.3% in Hong Kong but fell 1.2% in Australia and 1.1% in Indonesia.  Stocks gained 0.8% in China, 0.3% in India and 0.2% in Japan but slipped 0.5% in South Korea.  Equities in Europe have so far risen 1.5% in Italy, 1.8% in France, 1.4% in Germany, 1.1% in Switzerland, and 1.0% in Spain.  However, the British Ftse is just 0.2% firmer.

Ten-year British gilt and German bund yields are up by four and two basis points, while the Japanese JGB fell by three basis points.

West Texas Intermediate oil climbed 0.6% to $45.34 per barrel.  Comex gold fell closer to the $1,100 level and is down 0.7% since last evening at $1,105.95.

The U.S. government has elevated its criticism of Russian military action in Syria. 

Japanese labor statistics, household spending and income, and the monetary base were reported with mixed results.

  • The jobless rate unexpectedly rose back to 3.4% in August from a low for the move of 3.3%.  On-year employment growth slowed to 0.3% from 0.4%. But the job offers-to-applicants ratio continued to rise, reaching 1.23 from 1.21 in July and 1.19 in May and June.
  • Real household spending leaped 2.5% seasonally adjusted in August from July, causing its 12-month change to swing to a much-better-than-forecast 2.9% from negative 0.2% in July and -2.0% in June.
  • Growth in the monetary base from a year earlier picked up to 35.1% in September from 33.3% in August and 32.8% in July.  But the third-quarter average outcome, a rise of 33.7%, was less than the prior quarter’s 36.0% and well below the 43.2% increase booked in calendar 2014.

More evidence of forceful disinflation was reflected in eurozone producer prices, which sank 0.8% on month in August and 2.6% on year after 12-month drops of 2.1% in both June and July.  Energy plunged 2.6% on month, but other elements of the PPI collectively dipped 0.2%.  Between August 2014 and August 2015, producer prices slumped 8.4% in Greece, 7.3% in The Netherlands, 6.5% in Cyprus, 3.9% in Belgium, 3.6% in Italy, 3.3% in Ireland, 2.5% in Finland, 2.2% in Spain, 2.1% in France and 1.6% in Germany.

Britain’s construction purchasing managers index improved to a 7-month high of 59.9 in September after printing at 57.3 in August and 57.1 in July.

Australian retail sales went up 0.4% in August.  The 12-month rate of rise slowed to a 5-month low of 4.3% from 4.4% in July and 4.7% in June.  New home sales in Australia firmed 0.4% on month in August after dipping 0.1% in July.  This reassuring news produced a 4.5% advance from a year earlier.

New Zealand commodity prices increased by a strong 5.5%, but that was only the first advance since March.  The rise from a year earlier was just 2.7%.

South Korean consumer prices increased by a slower-than-forecast 0.6% in September.  The South Korean current account narrowed 11% to $8.46 billion in August. 

Hong Kong retail sales slumped 5.4% on year in July, twice as much as in June.

Romanian producer prices fell 2.7% on year in August, while non-auto retail sales increased 8.0% in the same span despite posting the first monthly decline in three months.  Hungary’s January-July trade surplus of EUR 4.9 billion was 32% wider than a year before.  Norway’s jobless rate of 2.9% in September was 0.2 percentage points greater than a year earlier.

U.S. factory orders get reported today as well as the aforementioned Labor Department report on jobs, wages, and unemployment.

Vice Chairman of the Federal Reserve Stanley Fisher speaks publicly today.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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