Dollar Up Amid More PMI Results and Unexpected U.S. Employment Data

December 3, 2021

The dollar strengthened overnight by 0.3% to within half a percentage point of its 52-week high. The currency is 0.4% higher against the euro but just 0.1% up versus the yen.

The price of WTI oil recovered 3.0%, and that of gold rose 0.5%. Ten-year sovereign debt yields have slipped two basis points in the U.K. and a basis point in the United States and Japan. Equities closed  up 1.0% in Japan and 0.9% in China but show losses so far today in the  United States and Europe.

Friday has seen another heavy flow of economic data releases. Market participants are scratching their heads over a perplexing array of numbers in the November U.S. employment situation. Jobs grew only 210k, the fewest in eleven months and about 350k less than forecast, but the rates of unemployment and of un- and underemployment respectively fell by 0.4 and 0.5 percentage points to 4.2% and 7.8%. Labor  market participation rose 0.2 percentage points on month but just 0.3 percentage points on year, and average hourly earnings growth of 0.3% on month and 4.8% on year was less than forecast.

The ISM-compiled U.S. non-manufacturing purchasing managers index jumped by 2.4 index points to a robust reading of 69.1, while the IHS-compiled composite U.S. PMI slipped back 0.4 points to a 2-month low of 57.2. The Commerce Department reported a 1.0% increase in U.S. factory orders during  October following gains of 0.5% in September and 1.0% in August. October’s level exceeded the year-earlier level by 13.4%.

Canada enjoyed a proportionally stronger labor market performance last month than the United States. Jobs surged 153.7k, and unemployment fell to 6.0% from 6.7% in the prior month. On-year growth in Canadian average hourly wages climbed to 3.0% from 2.1%. A separate Canadian data release revealed that labor productivity (-1.5% on quarter) had dropped twice as rapidly in 3Q as assumed.

Euroland retail sales in October recovered only 0.2% on a volume basis from a 0.4% drop in the prior month. Over the past five reported  months sales have risen a mere quarter of a percent, and the 1.4% rise between October 2020 and October 2021 was the smallest advance in a streak of eight consecutive months to show a positive year-on-year change.

French industrial production recovered 0.9% in October after slumping by 1.5% in September.

Quarterly GDP growth in Ireland decelerated sharply to 0.9% in 3Q 2021 from 5.2% in 2Q and 10.0% in the first quarter. Year-on-year growth dropped to a 3-quarter low of 11.4% from 21.1% in the second quarter.

Composite and service-sector purchasing manager surveys from November were reported for a number of other economies.

  • Euroland’s composite and services indices printed at 2-month  highs of 54.4 and 55.9, but each was revised lower compared to their preliminary estimates. In commenting on the findings, IHS officials spoke of “disjointed recoveries by nation and sector” and observed that inflationary pressures continued to intensify in November. Sub-indices for unemployment and near-term expectations were each weaker than  in the previous month, and the survey came too early to capture the impact of Omicron. Another disturbing element is that Euroland’s largest members (Germany and France) trailed the other economies using the euro. November’s overall uptick is likely to  prove short-lived.
  • Japan‘s composite and service-sector PMI readings of 53.3 and 53.0 constituted the highest levels in 49 and 27 months, respectively.
  • China‘s Caixin-compiled composite PMI slipped 0.3 points to a 3-month low of 51.2, suggesting slow positive activity. The services index also slid to a 3-month low.
  • India‘s composite PMI reading of 59.2 was that economy’s best scores in 117 months despite a 2-month low of 58.1 in the services index.
  • Brazilian composite and service sector PMI scores of 52.0 and 53.6 were the lowest since May.
  • Sweden’s 2-month high readings in composite and service sector PMI readings were each close to 70 at 67.2 and 68.7, respectively.

Hong Kong’s private purchasing managers index improved 1.8 points to a 3-month high  last month of 52.6. Readings above 50 connote a positive trend.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


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