On the positive side the details of the report showed some of the expected progress, with service sector performing well. However, with the level of employment 6.8 million below the pre-pandemic high, and roughly equivalent to an 8.5% unemployment rate, there is a lot of room for “substantial further progress”. The participation rate disappointed, remaining unchanged at a relatively depressed 61.6%. Issues remain in the female 20 -> 55 cohort (due to school closures and childcare?) and male 55+ cohort (potential early retirement from labour force?).
US interest rate, the USD currency, hard commodities and equity markets rallied on the jobs news. Softs were less convinced and energy markets were more focused on the OPEC+ meeting scheduled for the weekend.
Chinese, Taiwanese and South Korean PMIs were expansionary.
Central banks were quiet with Sweden’s Riksbank affirming rates unchanged and on hold till Q3 2024, and BoE’s Bailey ignored the parting shot from resigning Chief Economist Haldane, keeping the transitory inflation mantra.
Eurozone
Zone wide surveys of economic, industrial and services confidence ticked higher. Core CPI printed +0.3% MoM (0.2% exp., 0.3% prev.) and +0.9% YoY (0.9% exp., 1.0% prev.) and PPI printed in line with expectations. May Unemployment Rate 7.9% (8.0% exp., 8.0% prev.). French consumer confidence ticked higher as did the unemployment rate. Consumer spending was robust. EU Harmonized CPI was as expected at +0.2% MoM (0.2% exp., 0.3% prev.) and +1.9% YoY (1.9% exp., 1.8% prev.) German CPI ticked higher +0.4% MoM (0.3% exp., 0.3% prev.) and was steady at +2.1% YoY (2.1% exp., 2.4% prev.) Unemployment disappointed at -38.0k (-20.0k exp., -15.0k prev.) with the seasonally adjusted rate unchanged 5.9% (5.9% exp., 6.0% prev.) Retail sales printed +4.2% MoM (4.6% exp., -5.5% prev.) and -2.4% YoY (-1.0% exp., 4.4% prev.) Italian CPI printed +0.2% MoM (0.2% exp., 0.0% prev.) and +1.3% YoY (1.4% exp., 1.2% prev.) PMIs were expansionary as expected and the unemployment rate improved to +10.5% (10.7% exp., 10.7% prev.)
Norwegian core retail sales were strong at +5.8% MoM (0.3% prev.) and unemployment improved, but not as much as expected, printing +2.9% (2.8% exp., 3.3% prev.)
Swedish retail sales were strong at +2.3% MoM (-1.4% prev.) and sentiment surveys were high but very slightly lower than the previous month. The Riksbank met and left policy rates unchanged at 0.0% (0.0% exp., 0.0% prev.) The accompanying projections were interpreted as dovish, showing CPIF reaching 1.8% in 2023 and 2.1% in 3Q-2024 with the policy rate unchanged for this period.
Japan
The jobless rate ticked higher to +3.0% (2.9% exp., 2.8% prev.). Retail sales improved but were weaker than expected -0.4% MoM (-0.7% exp., -4.5% prev.) Industrial production and the all-important Tankan survey reiterated confidence in large manufactures versus smaller ones and other economic sectors. The survey showed strong capex intentions. The BoJ changed its government bond purchasing schedule, making additional reductions to QE on top of last month’s adjustment. The new schedule is in place for the next quarter.
UK
Haldane, who departed the BoE this week, gave his final speeches. He reiterated his view that QE is past its sell by date and questioned the diversity of the audience at the Bank’s annual Mansion House speech. The Governor spoke at Mansion House to the audience of questionable diversity, where he asked everyone not to overreact. To temporary inflation, that is.
USA
Nonfarm payrolls had a positive surprise, at last, printing +850k (720k exp., 559k prev.) and private payrolls beat expectations too. The unemployment rate ticked higher to +5.9% (5.6% exp., 5.8% prev.) and labour force participation dropped 61.6% (61.7% exp., 61.6% prev.). The underemployment rate at +9.8% (10.2% prev.), 3% above its previous cycle low was more of a statement on how much progress there is yet to make. Conf. Board sentiment surveys ticked higher as did house prices. Manufacturing surveys were expansionary, but slightly lower.
Australia
Job vacancies increased as did house prices. An outbreak of the delta variant caused Sydney, Brisbane, Perth, Darwin, Townsville and the Gold Coast to impose lockdowns; some states closed their borders and international travel was partially restricted. Subsequently, Alice Springs joined the lockdown – the irony being that without the tourist industry, who goes to Alice Springs? The lockdowns are scheduled to be lifted over the coming weeks although with the transmissibility of the delta variant this timeline may prove optimistic and goes to highlight the vulnerability of the Australian economy.
New-Zealand
The RBNZ’s statement of intent, published at the start of every financial year, referenced 2022s new board structure and 2023’s responsibility of deposit taking regime.
