Investors Treading Water Ahead of U.S. Monthly Release of Jobs Data

August 5, 2022

Market movements: U.S. stock futures and the dollar are barely changed.  Likewise, the prices of gold and West Texas Intermediate crude oil have dipped just 0.2% and 0.3%, although the latter has now retreated roughly 29% from its 52-week high set in early March. Bitcoin rallied 3.4%.

The Reserve Bank of India engineered a third hike of its policy interest rate, lifting such by 50 basis points to 5.40%. This matched June’s incremental rise, which had followed an initial 40-basis point increase in May. The rate is now at its highest level since September 2019. A released statement explained today’s move: “With inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilize inflation expectations and harm growth in the medium term. The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects.” A 7.0% CPI inflation rate in June exceeded the medium-term target range of 2-6%.

German industrial production unexpectedly rose during June. A 0.4% monthly advance resulted in the smallest year-on-year drop (-0.5%) in a sequence of four straight declines. A French 1.4% monthly rise of industrial output also surpassed expectations, but Italy‘s declines of 2.1% on month and 1.2% on year in June were worse than predicted.

Spanish industrial production rose 1.1% on month and by a 1-year high 7.0% in June.

Singaporean retail sales dropped 1.4% in June, cutting its 12-month increase to a 2-month low of 14.8%.

Czech retail sales rose only 0.2% in June and posted a year-on-year drop of 6.0%, similar to a May-over-May decline of 6.6%.

The British Halifax house price index dipped 0.1% on month in July, depressing its 12-month rate of increase to a 2-month low of 11.8%.

Price data released today around the world showed

  • Record CPI inflation of 22.9% in Estonia last month versus 5.0% a year earlier.
  • 6.4% Filipino CPI inflation in July, most in 45 months and up from 4.0% a year earlier.
  • A 5-month low in Taiwanese CPI inflation of 3.36% in July.
  • A minuscule dip in Thai CPI inflation to 7.61% in July from June’s 14-year peak of 7.66%.
  • A fifth straight wholesale price inflation rate of at least 20% in Austria, which at 22.8% was less than in the previous four months.

China’s current account surplus of $169 billion in the first half of 2022 was equal to about 1.9% of GDP and similar to the full-2021 surplus-to-GDP ratio of 1.8%.

Among Japanese releases, average cash earnings growth accelerated to 2.2% in June, a four-year high. Japanese real consumption spending recovered 1.5% on month in June and was 3.5% greater than in mid-2021. Japan’s index of leading economic indicators fell to a 4-month low, but the index of coincident economic indicators climbed to a 33-month high and earned a fourth straight “improving” trend designation from officials.

Indonesian GDP rose 3.7% on quarter and 5.4% on year in the second quarter. That was the best on-year pace since 7.1% in the second quarter of 2021 and the strongest quarterly advance since the third quarter of 2020.

The AIG-compiled service sector Australian purchasing managers index moved above the 50 threshold in July to a 3-month high of 51.7.

Shocking U.S. Jobs Report Just In: Non-farm payroll jobs soared 528k in July, twice analyst expectations and back to its pre-pandemic level. Unemployment fell 0.1 percentage point to 3.5%, lowest since January 2020. Average hourly earnings climbed 0.5% on month, 0.2 percentage points more than expected, and by 5.2% on year, unchanged from an upwardly revised June pace and 0.3 percentage points above street estimates. The report broadly points to a very tight labor market and implies continuing aggressive Fed tightening.

Canadian labor market figures for July were also just reported, and those showed a 30.6k drop in jobs following a decline of 43.2k in June, an unchanged jobless rate of 4.9%, softer growth in average wages (5.4% on year versus 5.6% in June), and a 0.2 percentage point dip in labor market participation to 64.7%.

Copyright 2022, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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