The Weekly Wrap – Weak Nonfarm Payrolls Wrap Up a Choppy Weak for the Markets

The Stats

It was a busier week on the economic calendar, in the week ending 8^th October.

A total of 44 stats were monitored, which was down from 65 stats in the week prior.

Of the 44 stats, 23 came in ahead forecasts, with 19 economic indicators coming up short of forecasts. There were 2 stats that were in line with forecasts in the week.

Looking at the numbers, 21 of the stats reflected an upward trend from previous figures. Of the remaining 23 stats, 23 reflected a deterioration from previous.

For the Greenback, nonfarm payrolls pared gains from earlier in the week. In the week ending 8^th October, the Dollar Spot Index rose by 0.03% to 94.067. In the previous week, the Dollar had risen by 0.80% to 94.074.

Out of the U.S

Early in the week, factory orders and ISM Non-Manufacturing PMI figures were in focus.

Factory orders rose by 1.2%, with the ISM Non-Manufacturing PMI increasing from 61.7 to 61.9.

There had been plenty of focus on the PMI, with particular attention to the employment and inflation sub-components.

In September, the employment sub-index fell modestly from 53.7 to 53.0. Inflationary pressures picked up, however, with the sub-index rising from 75.4 to 77.5.

On Wednesday, the ADP’s nonfarm figures had a relatively muted impact on the markets. In recent months, significant divergence from the government figures has watered down the impact on the markets.

Nonetheless, in September the ADP reported a 568k increase in nonfarm payrolls following a 340k increase in August.

On Thursday, jobless claims drew attention ahead of September’s NFP numbers on Friday.

In the week ending 1^st October, initial jobless claims fell from 364k to 326k.

More significantly, however, nonfarm payrolls rose by just 194k in September, falling well short of a forecasted 500k rise. While falling short, the unemployment rate fell from 5.2% to 4.8%, partly as a result of a lower participation rate.

Out of the UK

It was another quiet week, with finalized private sector PMIs for September and 2^nd quarter labor productivity in focus.

In September, the services PMI rose from 55.0 to 55.4, which was up from a prelim 54.6. As a result, the composite rose from 54.8 to 54.9, which was up from a prelim 54.1.

Labor productivity was also Pound positive, with productivity rising by 4.3% in the 2^nd quarter. In the quarter prior, productivity had risen by 2.2%.

In the week, the Pound rose by 0.51% to end the week at $1.3615. The Pound had fallen by 0.97% to $1.3546 in the week prior.

The FTSE100 ended the week up by 0.97%, reversing a 0.35% fall from the previous week.

Out of the Eurozone

It was another particularly busy week.

Early in the week, service sector PMIs for September were in focus.

Member Stats

Italy’s Services PMI fell from 58.0 to 55.5 versus a forecasted 56.5, with Spain’s down from 60.1 to 56.9. Economists had forecast a PMI of 58.0.

Finalized numbers from France and Germany also disappointed.

The French Services PMI slipped from 56.3 to 56.2, which was up from a prelim 56.0.

Germany’s Services PMI slid from 60.8 to 56.2 in September, which was up from a prelim 56.0.

The Eurozone

As a result of the better numbers from France and Germany, the Eurozone’s Services PMI fell from 59.0 to 56.4 which was up from a prelim 56.3.

In September, the Composite PMI declined from 59.0 to 56.2, which was up from a prelim 56.1.

Germany

Through the 2^nd half of the week, the German economy was in focus, with the stats skewed to the negative.

Factory orders tumbled by 7.7% in August, with industrial production falling by 4.0%.

Germany’s trade surplus narrowed from €17.9bn to €13.0bn versus a forecasted narrowing to €15.8bn.

While the stats were key, the ECB monetary policy minutes were also in focus late in the week.

There were no major surprises, however, with the markets more concerned with the impact of the latest inflation figures on policy.

For the week, the EUR fell by 0.23% to $1.1569. In the week prior, the EUR had fallen by 1.06% to $1.1596.

The EuroStoxx600 rose by 0.96%, with the DAX30 and the CAC40 ending the week up by 0.65% and 0.33% respectively.

For the Loonie

It was a busier week.

Early in the week, trade data impressed, with the trade surplus widening from C$0.74bn to C$1.94bn in August.

On Thursday, Ivey PMI numbers had a muted impact ahead of September employment figures on Friday.

In September, employment jumped by 157.1k, coming in well ahead of a forecasted 65.0k increase. Employment had risen by 90.2k in August. As a result, the unemployment rate fell from 7.1% to 6.9%.

In the week ending 8^th October, the Loonie rose by 1.39% to C$1.2472. In the week prior, the Loonie had risen by 0.03% to C$1.2648.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar rose by 0.70% to $0.7309, while the Kiwi Dollar ended the week down by 0.13% to $0.6939.

For the Aussie Dollar

Australia’s trade surplus widened from A$12.117bn to A$15.077bn in August. While upbeat, the RBA monetary policy decision was the main event of the week.

In line with market expectations, the RBA left monetary policy unchanged.

As expected, the RBA rate statement revealed a relatively optimistic Board, with members standing its ground on a rate hike in 2024.

For the Kiwi Dollar

Economic data was also on the quieter side. In Q3, the NZIER Business Confidence Index fell by 11%. The Index had risen by 7% in the quarter prior.

While business confidence waned, the RBNZ delivered an anticipated 25 basis point rate hike in Wednesday.

For the Japanese Yen

It was another relatively busy week.

Early in the week, Tokyo inflation and service sector PMIs were in focus.

In September, Tokyo’s annual rate of inflation picked up from -0.3% to 0.1%.

Service sector PMIs were also better than expected, rising from 42.9 to 47.8. This was up from a prelim 47.4.

At the end of the week, housing spending slid by 3.9% in August versus a forecasted 2.0% decline, however. Spending had fallen by 0.9% in July. Year-on-year, spending was down 3.0% after having been up 0.7% in July.

The Japanese Yen slid by 1.07% to ¥112.240 against the U.S Dollar. In the week prior, the Yen had fallen by 0.29% to ¥111.050.

Out of China

It was a particularly quiet week, with the service sector PMI for September the only stat of the week.

The Caixin Services PMI jumped from 46.7 to 53.40 providing riskier assets with some support at the end of the week.

In the week ending 8^th October, the Chinese Yuan increased by 0.02% to CNY6.4438. In the week prior, the Yuan had ended the week up by 0.33% to CNY6.4448.

The CSI300 and the Hang Seng ended the week up by 1.31% and by 1.07% respectively.