Nathan Janzen, the senior economist at Royal Bank of Canada (RBC), notes that the U.S. employment rose 130k vs expectations closer to 160k, while the unemployment rate held steady at 3.7% and the wage growth ticked lower but held above 3%.
Business School Purchasing Managers Index (PMI), measuring Canada’s economic
activity, rose to 60.6 in August from an unrevised 54.2 in July. That was the
highest reading since October 2018.
Economists had expected the gauge to hit 53.0.
A figure above 50 shows an increase while below 50 shows a decrease.
Within sub-indexes, the inventories indicator climbed to 54.8 in August from 46.9 in the prior month and the supplier deliveries gauge rose to 49.9 from 46.0, while the employment measure fell to 52.7 in this month from 56.6 in July and the prices index dropped to 51.3 from 59.2.
Josh Nye, the senior economist at the Royal Bank of Canada (RBC), notes that the Canadian employment rose 81,000 in August with part-time jobs accounting for most of the increase, while the unemployment was steady at 5.7% and wages continued to rise at a healthy clip.
Kjetil Olsen, an analyst at Nordea Markets, notes that the U.S. Nonfarm payrolls increased by a lower than expected 130k in August, following a revised 159k in July (down from 164k).
U.S. stock-index futures rose on Friday, despite the release of mixed jobs report, which showed a greater-than-expected slowdown in domestic job growth in August and a strong wage gain.
Today's Change, points
Today's Change, %
(company / ticker / price / change ($/%) / volume)
ALTRIA GROUP INC.
Amazon.com Inc., NASDAQ
Cisco Systems Inc
Citigroup Inc., NYSE
Exxon Mobil Corp
FedEx Corporation, NYSE
Ford Motor Co.
Freeport-McMoRan Copper & Gold Inc., NYSE
General Electric Co
Home Depot Inc
International Business Machines Co...
Johnson & Johnson
JPMorgan Chase and Co
Merck & Co Inc
Procter & Gamble Co
Starbucks Corporation, NASDAQ
Tesla Motors, Inc., NASDAQ
The Coca-Cola Co
Travelers Companies Inc
Twitter, Inc., NYSE
United Technologies Corp
UnitedHealth Group Inc
Verizon Communications Inc
Wal-Mart Stores Inc
Walt Disney Co
Yandex N.V., NASDAQ
Canada reported on Friday that the number of employed people surged by 81,100
m-o-m in August, while economists had forecast a gain of 15,000 and after an
unrevised drop of 24,200 in the previous month.
Meanwhile, Canada's unemployment remained unchanged at 5.7 percent, in line with economists’ forecast.
According to the report, full-time employment increased by 23,800 (or +0.2 percent m-o-m) in August, while part-time jobs climbed by 57,200 (or +1.6 percent m-o-m).
In August, the number of private-sector employees surged by 94,300 (+0.8 percent m-o-m), while the number of public sector employees dropped by 2,100 (-0.1 percent m-o-m). At the same time, the number of self-employed decreased by 11,200 (-0.4 percent m-o-m) last month.
Sector-wise, there were more people employed in finance, insurance, real estate, rental and leasing (+22,400) educational services (+20,500), and in professional, scientific and technical services (+16,800). In contrast, employment declined in business, building and other support services (-22,300).
On a year-over-year basis, employment grew by 471,000 (+2.5 percent) in August, driven by gains in both full- (+306,000 or +2.0 percent) and part-time work (+165,000 or +4.8 percent).
Bank of America (BAC) downgraded to Mkt Perform from Outperform at Keefe Bruyette; target lowered to $29
The U.S. Labor
Department announced on Friday that nonfarm payrolls increased by 130,000 in August
after a downwardly revised 159,000 gain in the prior month (originally an
increase of 164,000).
According to the report, employment in federal government rose by 28,000, due mainly to the hiring of 25,000 temporary workers for the 2020 Census. Meanwhile, private-sector employment rose by 96,000, with notable job gains in health care (+24,000 jobs) and financial (+15,000) activities, while mining (-6,000) lost jobs.
The unemployment rate remained unchanged at 3.7 percent in August.
Economists had forecast 158,000 new jobs and the jobless rate to stay at 3.7 percent.
The labor force participation rate edged up to 63.2 percent from 63 percent in July, while hourly earnings for private-sector workers rose 0.4 percent m-o-m (11 cents) to $28.11, following an unrevised 0.3 percent m-o-m gain in July. Economists had forecast a 0.3 percent m-o-m advance in the average hourly earnings. Over the year, average hourly earnings have increased by 3.2 percent, following a revised 3.3 percent rise in July (originally a gain of 3.2 percent).
The average workweek increased by 0.1 hour to 34.4 hours in August, matching economists’ forecast.
Lululemon Athletica (LULU) reported Q2 FY 2019 earnings of $0.96 per share (versus $0.71 in Q2 FY 2018), beating analysts’ consensus estimate of $0.89.
The company’s quarterly revenues amounted to $0.883 bln (+22.1% y/y), beating analysts’ consensus estimate of $0.845 bln.
The company also issued guidance for Q3, projecting EPS of $0.90-0.92 (versus analysts’ consensus estimate of $0.90) and revenues of $0.880-0.890 bln (versus analysts’ consensus estimate of $0.865 bln).
For FY2019, the company forecasts EPS of $4.63-4.70 (versus analysts’ consensus estimate of $4.64) and revenues of $3.8-3.84 bln (versus analysts’ consensus estimate of $3.81 bln).
LULU rose to $200.00 (+6.15%) in pre-market trading.
Iris Pang, the economist for Greater China at ING, notes the PBoC announced a 0.5 percentage point cut to the RRR effective in two batches on 15 October and 15 November.
Analysts at Danske Bank suggest that after a decline in inflation expectations since the start of the year, which intensified in the second quarter, they believe the ECB will now be forced to act.
Analysts at Westpac note that in 2019, the U.S. employment growth has throttled back to 165k, which is still ahead of the monthly pace necessary to keep the unemployment rate steady, but is a material deceleration from the strong 200k per month gains of the past 8 years.
Analysts at TD Securities are expecting Canada’s labour market to rebound with the creation of 15k jobs in August (market: 20k), following the first consecutive declines since 2014.
statistical office of the European Union (EU) reported its final estimates
showed that Eurozone GDP grew by 0.2 percent q-o-q in the second quarter, unchanged
from the previous estimates. In the first quarter, the GDP rose by 0.4 percent
In y-o-y terms, Eurozone’s economy expanded by 1.2 percent in the second quarter compared to +1.1 percent in the previous estimate and +1.2 percent in the prior three-month period.
Economists had forecast that both final quarterly and annual rates of the GDP growth would be left unrevised.
According to the report, household final consumption expenditure in the euro area rose by 0.2 percent q-o-q, while gross fixed capital formation increased by 0.5 percent q-o-q. Exports were flat q-o-q and imports increased by 0.2 percent q-o-q.
Among the bloc’s largest economies, the United Kingdom (-0.2 percent), Germany (-0.1 percent) and Sweden (-0.1 percent) posted declines, while Italy stagnated.
The report also revealed that employment in Eurozone increased by 0.2 percent q-o-q in the second quarter and 1.2 percent y-o-y. In the first quarter, the number of persons employed rose 0.3 percent q-o-q and 1.3 percent y-o-y.
Analysts at ANZ note that Australia’s Q2 GDP report revealed an economy that has been held up by net exports and government spending, but private demand was exceptionally weak, continuing a trend that has been in place for some time.
Axel Rudolph, an analyst at Commerzbank, notes that GBP/USD’s recent slide to its current September low at 1.1958 was accompanied by a large divergence on the daily RSI.
Analysts at TD Securities are expecting China’s imports to decline 5.3% y/y (mkt -6.5% y/y) in August and exports to increase 5.7% (mkt 2.0% y/y).
Danske Bank's analysts expect the long-awaited ECB meeting on 12 September to set the scene for months and potentially quarters to come.
The report from
Halifax and IHS Markit showed that the house prices in the UK rose 0.3 percent
m-o-m in August after a revised 0.4 percent m-o-m increase in July (primary a
drop of 0.2 percent m-o-m). That exceeded economist forecast of 0.2 percent
On a three-month basis, however, the house prices edged up 0.1 percent q-o-q in three months to August.
Meanwhile, the prices in the three months to August were 1.8 percent higher than in the same period of 2018. That was higher than a revised 1.5 percent y-o-y gain in July (originally a 4.1 percent y-o-y surge). Economists expected an increase of 3.4 percent.
Russell Galley, Managing Director, Halifax, noted that there was no real shift in house prices in August as the average property value grew by just 0.3 percent month on month. “This further extends the predominantly flat trend we’ve seen over the last six months, with the average house price having barely changed since March”, he added. ““While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong. Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should also not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.”
Danske Bank analysts note that the U.S. labour market report is due today and it will be a key economic release for the session.
Carsten Brzeski, the chief economist at ING Germany, notes that Germany's industrial production dropped by 0.6% month-on-month in July from a slightly upwardly revised drop of 1.1% MoM in June.
FX Strategists at UOB Group suggests that, following the recent price action, NZD/USD could now attempt to consolidate in the short-term.
24-hour view: Our view for NZD yesterday was it “could edge above 0.6375 but the next major resistance at 0.6410 is not expected to come into the picture”. NZD subsequently touched 0.6395 before staging a relatively sharp pull-back. Upward pressure has eased and for today, 0.6410 is still unlikely to come into the picture. From here, the pull-back in NZD could extend lower but any weakness is viewed as a lower 0.6345/0.6390 trading range (a sustained decline is not expected)”.
Next 1-3 weeks: There is not much to add to the update from Wednesday (04 Sep, spot at 0.6335) wherein NZD is “expected to trade sideways but is likely to test the top of the 0.6290/0.6410 range first”. While NZD rose to 0.6395 yesterday (05 Sep), overbought shorter-term conditions suggest 0.6410 could be out of reach for the next few days. Looking ahead, if NZD were to move clearly above 0.6410, it would suggest a stronger recovery to 0.6450, possibly 0.6500."
Axel Rudolph, an analyst at Commerzbank, suggests that EUR/USD pair has seen a strong bounce from its current September low at 1.0926 and the nearby resistance can be found at the April and May lows at 1.1110/1.1106 as well as along the three-month resistance line at 1.1132.
“Only a daily chart close above the August 26 high at 1.1164 would confirm a bottoming formation and put the 200-day ma at 1.1268 back on the cards. Ideally, we would like the 55-week ma at 1.1329 to be exceeded as well. Support below the minor psychological 1.1000-mark comes in at the current September low at 1.0926.
Below the 1.0926 low lie the June 2016 low and the March 2017 high at 1.0912/07. Further down sit the January 2017 low at 1.0829 and the 78.6% Fibonacci retracement of the 2017-2018 advance at 1.0814.
The cross will need to regain the 55-week ma and downtrend channel resistance line at 1.1329/46 to generate upside interest.”
Japan’s household spending increases less than expected in July
The Ministry of Internal Affairs and Communications announced on Friday that the Japanese household spending increased 0.8 percent y-o-y in July, following a 2.7 percent y-o-y surge in June.
Economists had expected household spending to rise 1.1 percent m-o-m in July.
Individually, spending increased for medical care (+8.5 percent y-o-y), housing (+6.3 percent y-o-y), education (+3.8 percent y-o-y), transportation and communication (+2.0 percent y-o-y) and culture & recreation (+2.0 percent y-o-y), but reduced for furniture & household utensils (-7.5 percent y-o-y), utilities (-3.4 percent y-o-y), apparel (-3.4 percent y-o-y), and food (-0.5 percent y-o-y).
In m-o-m terms, household spending fell 0.9 percent in July after a 2.8 percent drop in June.
Japan's leading index stays at 93.6 in July
The preliminary data from the Cabinet Office showed Friday that Japan's leading index, a gauge for the economy's performance months ahead, remained unchanged at 93.6 in July compared to an upwardly revised June’s reading. That was above economists forecast of 93.2.
Meanwhile, the coincident economic index for Japan, which reflects current economic conditions, rose to 99.8 in July from a downwardly revised 99.5 in June.
Statistical Office (Destatis) reported on Friday that Germany’s industrial
production dropped 0.6 percent m-o-m in July after a revised 1.1 percent m-o-m
decrease in the prior month (primary a decline of 1.5 percent m-o-m).
Economists had forecast a 0.2 percent rise in July.
The major contributors to the July production fall were lower outputs of capital goods (-1.2 percent m-o-m) and intermediate goods (-0.7 percent m-o-m) as well as decreased energy production (-1.3 percent m-o-m). At the same time, production of consumer goods (+0.6 percent m-o-m) and construction output (+0.2 percent m-o-m) recorded increases.
Excluding energy and construction, production in the industry was down by0.8 percent m-o-m in July.
In y-o-y terms, industrial production fell 4.2 percent in July.
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