US exchanges were closed Friday when the street had one of its most epic fails in calling nonfarm payrolls as payrolls rose by only 126K, slightly more than half of the 245K the street had expected. I was better than many with my 210K guesstimate but even that was still way off.
Thinking about why US jobs suddenly went off a cliff, my suspicion is that the slowdown in the oil and gas sector may have finally caught up to payrolls although the loss of so many high paying oilfield jobs hasn’t hit average earnings yet. It’s also possible that there could be seasonal weather factors or that so many jobs were added in January and February that people ran out of quarterly or annual budget room to hire in March, but these latter two are more flimsy arguments.
In reaction to the news Friday, USD fell as speculation of a June interest rate hike faded, and it may continue to retreat in coming sessions as expectations for liftoff get pushed out toward September or possibly even later in the year.
also fell Friday and this could follow through into stock markets as they return to trading today. Between the higher USD, struggling overseas economies and now a weakening domestic economy the outlook for corporate earnings and guidance has become increasingly dismal. Because of this stocks may be standing on shaky ground for the next few days until enough results come out to settle the score.
The weakening USD continues to take the pressure off commodity and currency markets. Gold is benefitting the most from this today gaining over 1% with EUR and CAD posting more moderate gains. The loonie is also benefitting from another rally in crude oil that has seen WTI and Brent gain over 2% after Saudi Arabia raised the price it charges customers in Asia due to rising demand. AUD and NZD have been soft to start the week but could be active later on today particularly around this month’s RBA meeting
There have been no major corporate announcements this morning.
Economic reports released overnight and this morning include:
US nonfarm payrolls 126K vs street 245K
US nonfarm payrolls previous revised down to 264K from 295K
US private payrolls 129K vs street 238K
US unemployment rate 5.5% as expected
US average hourly earnings 2.1% vs street 2.0%
US participation rate 62.7% vs street 62.8%
Spain unemployment (60K) vs previous (13K)
India service PMI 53.0 vs previous 53.9
Economic reports due later today include:
9:45 am EDT US service PMI street 58.6
10:00 am EDT US ISM non-manufacturing PMI street 56.5
10:00 am EDT Canada Ivey PMI street 50.0 vs previous 49.7