Today’s News Round-Up: ADP Jobs Report Jumps, UK and Germany Production Data Surprises on Upside
1. ADP Employment Change Jumps by 157K in June:
The ADP Employment change in came in much stronger than expected, showing the private sector adding 157K during the month of June. That near tripled expectations, and can help set up a better than expected figure in the non-farm payroll report.
The news helped sense a surge of risk appetite through the currency markets, with higher yielders benefiting against the safe haven currencies (CHF, JPY). The USD was stronger against the JPY and CHF as the positive jobs report gives the US a positive fundamental bias in today’s session.
The USD was weaker against the CAD, as the Canadian economy is strongly tied to the health of the US economy, that it benefits from positive US news more so than other commodity currencies. We saw oil move higher in the wake of the release as well.
Jobless claims data also came in better than expected, sliding to 418K from 428K.
2. German Industrial Production Climbs 1.2%, More Than Expected in May:
Just like we saw in factory orders data earlier in the week which came in stronger than expected, today’s German industrial production data also surprised on the upside. Output rose 1.2% in May, compared to a drop of 0.8% in April, and with the leading indicator factory orders up, we should see a strong June as well.
That bodes well for the German economy, which of late has been experiencing some cooling of its economy, but as the data this week shows its shouldn’t be considered a marked slowdown.
From Bloomberg: “Production of investment goods jumped 2.5 percent from April and output of basic goods rose 0.7 percent, the report showed. Consumer-goods production stagnated in May and construction output increased 1.1 percent.
The pace of expansion may slow somewhat in the coming months after order intake moderated recently, the ministry said.
Factory orders rose 1.8 percent in May from the previous month, when they gained 2.9 percent, led by domestic demand for investment goods, the ministry said yesterday. Companies are increasing spending and hiring to meet surging demand, putting more money in consumers’ pockets and broadening the country’s recovery that has driven the euro region’s expansion.”
3. UK Manufacturing Rebounds 1.8% in May:
We had a positive release from the manufacturing sector in the UK. Manufacturing output rose 1.8% in May, a stronger than expected rebound for the sector after it had seen production decline by 1.6% in April.
In fact it was the biggest monthly increase since March 2010. The strong reading came as a result of factories rebounding from the supply disruptions brought about by Japan’s March earthquake and tsunami, as well as an extra public holiday in April.
Indications for next month’s reading may not be as good considering the manufacturing PMI has been coming in weaker for the last few months, sliding in June to 51.3 from 52.1.
From Bloomberg: “From a year earlier, manufacturing rose 2.8 percent in May. Overall industrial output rose 0.9 percent on the month and fell 0.8 percent on the year. There were declines of almost 6 percent in mining and quarrying and oil and gas output in May.
In the three months through May, manufacturing declined 0.2 percent from the previous quarter and industrial production fell 1.5 percent, suggesting industry will act as a drag on growth in the second quarter.”
Chief Market Analyst
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