Marking Time Ahead of U.S. September Labor Market Data Release – Currency Thoughts
Marking Time Ahead of U.S. September Labor Market Data Release
October 4, 2024
At this writing, the release of U.S. and Canadian labor market statistics is just over an our away. The dollar fell 0.3% overnight against the yen and sterling, but its other major relationships have barely moved.
Two developments worth monitoring involve rises in oil and food prices. At $74.7 per barrel, West Texas Intermediate oil is 1.4% above Thursday’s close and has jumped 9.2% in the past five days, lifted most recently by President’s comment regarding a possibility that Israel may target Iranian oil fields. The monthly food price index compiled by the UN Food and Agriculture Organization jumped 3.0% last month to a 14-month high.
China’s stock market remained closed for Golden Week, but share prices elsewhere in the Pacific Basin closed up by 2.8% in Hong Kong, 0.6% in Singapore, 0.4% in New Zealand and 0.2% in Japan but down 1.0% in India, 0.7% in Australia and 0.6% in Indonesia. U.S. futures and major stock markets in the euro area are marginally up, while the British FTSE has shed 0.6%.
Ten-year sovereign debt yields rose overnight by six basis points in Japan, five basis points in the U.K., four basis points in Germany, three basis points in France, two basis points in Italy and a basis point in the United States.
More purchasing manager reports from September trickled in.
- India’s composite and service sector indices fell to 10-month lows but remained well above the neutral 50 threshold at 58.3 and 57.7.
- Hong Kong’s private sector index sat right on 50.0 after printing in the high forties in each of the four prior months.
- The British construction PMI leaped 4.2 points higher to a 29-month high of 57.2.
- Euroland’s construction index rose 0.7 points but, at 42.1, remained mired well in contractionary territory. A six-month low of 41.4 had been touched in August, and sentiment regarding the future 12-month outlook deteriorated further.
- Among the three biggest economies within Euroland, the French construction PMI sank 2.2 points to a 52-month low of 37.9, while the German and Italian indices of 41.7 and 47.8 reflected their least pessimistic readings in 16 and 4 months, respectively.
Serbian producer prices fell 0.8% on month and 0.6% on year. That was the first sub-zero 12-month change in 44 months.
Consumer prices in the Philippines dipped 0.2 in September and recorded their lowest 12-month increase (1.9%) in 52 months. That was down from a peak of 8.7% touched in January 2023.
French industrial production rose 1.4% in August versus the prior month, which led to an above-zero year-on-year change (+0.5%) for the first time since April. Industrial production posted year-on-year declines of 9.5% in Hungary, 6.0% in Estonia, and 0.1% in Spain during August, but Latvian industrial production was 2.1% greater than in August 2023.
Italian retail sales tumbled 0.5% on month in August and were just 0.8% greater than in August 2023.
Switzerland’s seasonally adjusted jobless rate of 2.6% in September was up from 2.4% in June.
Analysts anticipate a similar U.S. jobs report to the one in August that had showed a 142k rise in jobs, a 4.2% unemployment rate, and on-year wage growth of 3.8%.
Postscript on Labor Figures: A rise of 254 thousand non-farm payroll jobs in September exceeded the street consensus by a bit over 100k and was augmented by an upward 72k combined revision to employment growth in July and August. 254k was the most jobs creation for a month since March and compares to the recent low of 108k in April and a monthly average of 203k during the past year. The jobless rate ticked down to 4.1% from 4.2% in August and 4.3% in July, so the three month average of 4.2% now exceeds the lowpoint of 3.7% over the last year by 0.5%, thus meeting the Sahm rule but just barely. The directions of unemployment and broader U6 measure that includes underemployment from mid-year to end-3Q were moreover both downward. The U6 rate of 7.7% was down from 7.9% in August. Average hourly earnings growth of 0.4% on month and 4.0% on year slightly surpassed expectations, too, but inflation-adjusted pay growth when juxtaposed with September’s on-year rise of 2.2% in the personal consumption expenditure price deflator and 2.7% PCE core deflator has become significantly positive. Taken together, this report paints a good picture but not so hot as to dissuade Fed officials from making two more small rate cuts in 2024. U.S. equity futures reacted favorably, and the 10-year Treasury yield increased eight basis points in the half hour immediately following the release.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: construction PMIs in Euroland and the U.K.
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