On Wednesday Chicago PMI data was released. The Chicago business barometer, or Chicago PMI, rose to 59.4 in May from 58.3, MNI Indicators said Wednesday after initially reporting an incorrect number. Any reading over 50 indicates improving conditions. Originally, the firm mistakenly reported that its Chicago-area gauge fell to 55.2, adding to downward pressure early Wednesday on U.S. stocks. MNI has not explained how the error occurred. The index has risen sharply since President Donald Trump took office in January promising to boost the economy with a series of pro-business policies.
Thursday was marked by ADP Employment Change, Unemployment Claims and Manufacturing PMI figures. Private sector employment increased by 253,000 jobs from April to May according to the May ADP National Employment Report. “May proved to be a very strong month for job growth,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Professional and business services had the strongest monthly increase since 2014. This may be an indicator of broader strength in the workforce since these services are relied on by many industries.”
Separate report on Unemployment Claims showed that U.S. jobless-benefit claims remain low despite an increase last week, with the labor market otherwise exhibiting signs of continued tightening, Labor Department data showed Thursday. Initial filings increased by 13k to 248k (est. 238k). Continuing claims decreased by 9k to 1.915m in week ended May 20 (data reported with one-week lag). Four-week average of initial claims, a less-volatile measure than the weekly figure, rose to 238k from 235.5k in the prior week.
American factories are settling back into a solid pace of expansion after a post-election run-up that saw the Institute for Supply Management’s manufacturing gauge hit an almost three-year high, figures released Thursday showed. Factory index little changed at 54.9 (est. 54.8) from 54.8 in April; readings above 50 indicate growth. ISM’s gauge of new orders increased to 59.5 from 57.5. Measure of production eased, while employment index picked up 15 of 18 manufacturing industries reported growth.
Focus of the Friday's session was on NFP figures. The US unemployment rate unexpectedly fell to 4.3%, a new multi-year low, but it is a misleading optic for what is a disappointing report. It is likely not weak enough to put much doubt into expectations for a Fed hike later this month, but it will reinforce the caution in the Beige Book and in recent comments from some Fed officials. Besides the decline in the unemployment rate, and a further decline in the under-employment rate (U-6) from 8.6% to 8.4%, there is little positive in today's report. Non-farm payroll growth fell to 138k, nearly 50k below median expectations, which like our own, had been bolstered by the weekly jobs claims, withholding tax, and the ISM.
This week markets will be looking at:
ISM Non-Manufacturing PMI (Monday 16:00)
Unemployment Claims (Thursday 14:30)
