2010 08 06

US job market still dismal
• Another poor employment number after yesterday’s horrible initial jobless claims
• There was a reduction of 131,000 jobs in July the US, according to the Bureau of Labor Statistics. Many of the layoffs were the result of part-time census workers who had completed their work. But, the private sector failed to kick in with much in the way of new hiring – adding 71,000 new positions.
• “The implications of this report is that we are moving forward, we are not in a double dip situation,” says Joel Naroff of Naroff Economic Advisors in Holland, Pa. “But this modest job recovery is indicative of the fact the upturn is nothing great.”
• Looking forward though I think we might see upside surprise. Employment indices have been ok in both ISM manufacturing and services survey. And average hours worked keeps going up -> employers are reluctant to hire so they’re making existing workers work more. As long as work hours are there income can go up and in the end it probably matters more how much income is there to be spent rather than how many people have jobs. While job numbers won’t be good I am starting to think we might be overshooting pessimism on jobs and consumers now. Watch out for a possible trade on sentiment overshoot.


RBA statement gives more confidence to its currency
• RBA’s latest quarterly statement reiterated its view that inflation remains low while economic growth robust. Largely unchanged from previous statement.

Swiss unemployment unexpectedly falls
• The State Secretariat for Economic Affairs released the jobless report today with an downward revision.
• The Unemployment Rate decreased by 0.1%. The previous reading standing at 3.9% which was expected to remain unchanged by markets came down today to 3.8%
• Swiss economy actually has been doing very well and its currency continues to get higher. Might be worth looking at equities and currency to see if there could be a trade down the line.

OECD leading indicators signal recovery peaked in most countries
• I don’t pay much attention to these third party indicators – if they worked why would anyone publish it for sale. But when everyone agrees on an economic outlook that’s something to look at. GS and other leading indicators I have seen basically agrees with this - the peak growth was in Q2 and it’s going to slow down from here.
• Recovery by leading world economies may be peaking, particularly in the United States, a leading indicator published by the OECD showed on Friday.
• But Germany seems set for continuing "relatively robust" performance.
• The Organisation for Economic Co-operation and Development said its monthly index of pointers to the direction of expansion in leading economies, known as the composite leading indicators (CLI), "decreased by 0.1 point in June."
• It said that the CLI indicators of the outlook in "France, Italy, China and India all point to below trend growth in coming months, whilst the CLI for the United Kingdom points to a peak in the pace of expansion."
• It said: "Stronger signs of a peak in expansion have also emerged in Brazil and Canada, and in the United States the CLI has turned negative for the first time since February 2009."
• The indicators for Japan and Russia pointed to coming slowdowns in the pace of expansion.
• But for Germany "the CLI remains relatively robust."

UK manufacturing (industrial production) grew again in June
• Generally industrial production data not that useful because of long delay. PMI is usually what people look at as a gauge into manufacturing since it comes out with practically no delay. But IP data provides far more detail.
• U.K. manufacturing increased for a second month in June in the best calendar quarter for factory production in more than a decade as the economic recovery strengthened.
• Output climbed 0.3 percent from the previous month, when it rose by the same amount, the Office for National Statistics said today in London. The median forecast of 24 economists in a Bloomberg News survey was for an increase of 0.4 percent. Overall industrial production unexpectedly fell due to earlier- than-usual maintenance of oil and gas fields.

German industrial production fell unexpectedly in June
• German industrial production fell 0.6% in June from the previous month on unexpected declines in the construction and manufacturing sectors, government data showed Friday.
• Economists surveyed by Dow Jones Newswires had expected a 0.7% increase from May.
• "One has to put things in perspective: this contraction came on the back of a whopping 2.9% month-on-month expansion in May," Peter Vanden Houte, an economist for ING Bank, said in a research note. "While today's figures came in weaker than expected, the German growth locomotive is definitely not slowing down."
• Friday's data were in contrast to manufacturing orders figures released Thursday, which showed German orders increasing 3.2% in June from May.

Canadian unemployment rises unexpectedly – CAD lower today as a result
• My guess is this is just a blip
• Canada's strong economic recovery lost steam in July as the country dropped 139,000 full-time jobs and the unemployment rate edged up to 8 percent.
• Canada has made up nearly all the jobs lost during the recession over the last year, but July is the first month this year the country has failed to create jobs.
• The unemployment rate edged up one-tenth of a point to 8 percent, the first time the rate has risen in almost a year.
• Canada withstood the global economic crisis better than most developed countries. There was no mortgage meltdown or subprime lending crisis in Canada where the financial sector is dominated by five large banks.


Australia June wheat exports fall 19 pct from May
• Australia, the world's fourth-largest wheat exporter, shipped 19 percent less wheat to overseas markets in June than in May, the Australian Bureau of Statistics said on Friday.
• The bureau said Australia exported 1.165 million tonnes in June, down from 1.442 million tonnes in May and 1.641 million tonnes in June last year.