httpvh://www.youtube.com/watch?v=1K6kmtv83X4
Non-farm payrolls offer a silver lining States-side.
• US jobs data positive for “risky” currencies.
• Greek unions strike while default concerns loom.
• UK recovery slips as China takes a breather.
The economic data out of the US this week is something akin to the green shoots of a recovery, rather than the fragile “fits and starts” we’re used to. There was a host of mediocre data out this week however the pre-eminent jobs figure in Non-farm Payrolls beat estimates with 244K jobs added in April. Although more people were filing for benefits last week than the week before, this increase to the participation rate provides a strong undercurrent for their economy. Average hourly earnings were also higher at 1.9%. Despite this hawkish data equities were down on the week, however this was largely attributed to lower commodity prices last week which have since recovered slightly. Earnings season continued to have strong performers and there has been an increase in corporate activity, including the Microsoft takeover of Skype.
Grecians striking is never a good look when the country is seeking a bailout to contain the spiralling cost of debt, 12months after the last package. It’s a contentious issue on whether to provide a blank check to support Greek debt and with German elections on the horizon there may be political pressure to undermine further bailout packages. The reality is that should Greece leave the Euro, it would significantly hamstring credit markets in the region and thus propping up Greek debt is currently the lesser of two evils. This time round it’s a further 60B Euros to be injected and with this heightened risk of default there has been a weak showing for the Euro against the AUD.
Data out of the UK is usually consistent of a strengthening recovery however data out recently has been mediocre. This week, Housing Prices (-1.3%), PMI Construction (53.3) and PMI Services (54.3) were down while their Trade Deficit expanded (-4.479B). These are testing times for the UK economy and naturally the BoE kept rates on hold this week, as Mervyn King is more content with commodity based inflation than his ECB counterpart. In our region, data out of China suggested that the growing panda that is their economy may have slowed. CPI was lower at 5.3%, while Industrial Output fell within estimates at 13.4%. Unlike the UK data, this data was interpreted as a positive as the requirements for continued monetary belt tightening and restrictions on lending are not as acute.
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