Wednesday's US session brought Manufacturing PMI figures. The May PMI registered 51.3 percent, an increase of 0.5 percentage point from the April reading of 50.8 percent. The New Orders Index registered 55.7 percent, a decrease of 0.1 percentage point from the April reading of 55.8 percent. Manufacturing registered growth in May for the third consecutive month, as 14 of our 18 industries reported an increase in new orders in May (down from 15 in April), and 12 of our 18 industries reported an increase in production in May (down from 15 in April).
Thursday was marked by ADP job figures and Unemployment Claims. Private sector employment increased by 173,000 jobs from April to May according to the May ADP National Employment Report. "Job creation appears to have slowed as we move further into 2016,” said Ahu Yildirmaz, VP and head of the ADP Research Institute. “Challenging global conditions affecting hiring at large companies and a tightening labor market for skilled workers are among the factors that may be contributing to the slowdown.”
Separate report showed that in the week ending May 28, the advance figure for seasonally adjusted initial claims was 267,000, a decrease of 1,000 from the previous week's unrevised level of 268,000. The 4-week moving average was 276,750, a decrease of 1,750 from the previous week's unrevised average of 278,500. There were no special factors impacting this week's initial claims. This marks 65 consecutive weeks of initial claims below 300,000, the longest streak since 1973.
Focus of the Friday's session was on NFP, Trade Balance and Non-Manufacturing PMI figures. Total nonfarm payroll employment changed little in May (+38,000). Analysts were anticipating increase by 159,000. Job growth occurred in health care. Mining continued to lose jobs, and a strike resulted in job losses in information. Unemployment rate declined by 0.3 percentage point to 4.7% and the number of unemployed persons declined by 484,000 to 7.4 million. Both measures had shown little movement from August to April.
The U.S. trade deficit increased less than expected in April as exports of goods rebounded strongly, suggesting that trade would be a boost to economic growth in the second quarter. The Commerce Department said on Friday the trade gap rose 5.3 percent to $37.4 billion. March's trade deficit was revised down to $35.5 billion, which was the smallest since December 2013, from the previously reported $40.4 billion. The government revised trade data going back to 2013. Economists polled by Reuters had forecast the trade deficit rising to $41.3 billion in April.
The NMI registered 52.9 percent in May, 2.8 percentage points lower than the April reading of 55.7 percent. This represents continued growth in the non-manufacturing sector at a slower rate. The Non-Manufacturing Business Activity Index decreased to 55.1 percent, 3.7 percentage points lower than the April reading of 58.8 percent, reflecting growth for the 82nd consecutive month, at a slower rate in May. According to the NMI, 14 non-manufacturing industries reported growth in May. Respondents’ comments are mixed and vary by industry and company. Overall, the report reflects a cooling-off and slowing in momentum from the previous months of growth for the non-manufacturing sector.
This week markets will be looking at:
JOLTS Job Openings (Wednesday 16:00)
Unemployment Claims (Thursday 14:30)
Prelim UoM Consumer Sentiment (Friday 16:00)
