Live Markets: Thursday data: Prelude to payrolls
02/05/2024 16:17
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U.S. stock indexes rise; Nasdaq out front
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Tech up most among S&P sectors; materials biggest laggard
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STOXX 600 down 0.2%
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Dollar ~flat; gold, crude down; bitcoin up ~3%
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U.S. 10-year Treasury yield up at 4.63%
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THURSDAY DATA: PRELUDE TO PAYROLLS
A swath of economic data was released on Thursday, most of
which behaved by not delivering any surprises of note.
Most of which, not all.
Labor costs USLCP=ECI surged in the first three months of
the year, rising 4.7% after remaining unchanged in Q4 2023 and
breezing past the 3.3% increase analysts expected.
For its part, productivity growth USPROP=ECI decelerated
to 0.3% on the heels of the prior quarter's 3.5% increase.
It was a weaker reading than the 0.8% growth economists
forecast.
The two metrics tend to move like a see-saw; when
productivity dips, labor costs rise and vice versa. And the two
are nearing an equanimity, according to Ian Shepherdson, chief
economist at Pantheon Macroeconomics.
"(The) jump in unit labor costs is chiefly the consequence
of the temporary slowing in productivity growth," Shepherdson
writes, adding that the report "supports the Fed's view that the
labor market has moved into better balance."
The number of U.S. workers to join the unemployment line
last week USJOB=ECI was a repeat of the previous week's
208,000 landing below the 212,000 consensus, according to the
Labor Department.
But the underlying trend, as expressed by the 4-week moving
average of initial claims, is downward.
While ordinarily a shorter queue outside the unemployment
office is a happy sight, it speaks to the ongoing labor market
tightness identified by Powell & Co as a barrier to reining in
inflation.
Ongoing claims USJOBN=ECI , reported on a one-week lag, was
- oddly enough - also a repeat of the 1.774 million of the week
prior.
"The numbers speak for themselves," says a note from
Jefferies' U.S. Economics team, headed by Thomas Simons. "The
data shows no evidence of increasing layoffs or increasing
friction against people finding a new job after losing one."
Speaking of losing jobs - in April, corporate America
announced it would axe 64,789 jobs, according to executive
outplacement firm Challenger, Gray & Christmas (CGC).
That's 28% fewer than in March, and 3.3% below the April
2023 reading.
Total planned layoffs year-to-date are off 4.6% from the
first four months in 2023.
"The labor market remains tight," writes Andrew Challenger,
senior vice president at CGC. "But as labor costs continue to
rise, companies will be slower to hire, and we expect further
cuts will be needed."
"This low April figure may be the calm before the storm."
So far this year, technology, government and financial
sectors have suffered the most job cuts.
All of this is prologue to tomorrow's employment report,
which is expected to show the U.S. economy added 243,000 jobs in
April as the unemployment rate held firm at 3.8%.
Moving on to international trade, the gap between the value
of goods and services imported to the U.S. and those exported
abroad narrowed in March by a barely perceptible 0.1% to $69.4
billion.
Beneath that tranquil topline, weakening demand appears to
be responsible for imports and exports to have declined by 1.6%
and 2.0%, respectively.
Net exports detracted 0.9 percentage points from
first-quarter GDP, according to the Commerce Department's
preliminary take on the data released last week.
And finally, new orders from U.S. factories USFORD=ECI
stuck the landing by increasing 1.6% in March, just as analysts
predicted.
(Stephen Culp)
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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
WALL STREET EYES A DOVISH WAIT - CLICK HERE
U.S. INDEX FUTURES CLIMB EARLY AS INVESTORS DIGEST FED -
CLICK HERE
A BALANCING ACT TO LURE INFLOWS INTO UK EQUITIES - CLICK
HERE
THE UK HAS ITS PREMIUM STOCKS TOO! - CLICK HERE
POST-DATA PRICE ACTION SUGGESTS STAGFLATION FEARS - UBS
-CLICK HERE
SCOPE FOR MORE EPS UPGRADES IN EUROPE - BOFA - CLICK HERE
STOXX GOING NOWHERE, "LOW QUALITY BEAT" FOR NOVO - CLICK
HERE
EUROPE EYES MUTED START POST-FED - CLICK HERE
INTERVENE, RINSE, REPEAT - CLICK HERE
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Wall Street rises as investors read Fed tea leaves https://tmsnrt.rs/4doojBv
Productivity and labor costs https://reut.rs/4bnxxfN
Jobless claims and planned layoffs https://reut.rs/4dljn0q
Trade balance https://reut.rs/4a4911W
Factory orders https://reut.rs/4b4N0S3
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