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US unemployment claims at the lowest level since 1969, but ADP nonfarm payroll below economists’ expectations

Sep 7 • Morning Roll Call • 160 Views • No Comments

Yesterday investors were eager to find out the most recent numbers regarding the unemployment claims coming from the United States of America, and the results were not disappointing. As per the readings, the number of US citizens that have applied for the unemployment benefits is at its lowest level since December 1969, where the claims dropped to seasonally adjusted 203k, as opposed to the expected 214k. The better-than-expected numbers are signaling a constant labor market strength, which is expected to support further economic growth and at this point the labor market is seen as being near to full employment. On the other hand, the ADP non-farm employment change figures came with a disappointment, where the actual reading was 163k, as opposed to the forecasted 195k, where the American private employers have added less than expected jobs in the previous month, signaling a slowdown. Nevertheless, according to ADP Research Institute co-head, Ahu Yilmaz, the current engine of growth are the mid-sized businesses that have added almost 70% of all jobs counted and are staying resistant to the current economic climate. Mostly affected in the jobs market are the small business, which are facing problems to stay competitive and attract new workers to fill in the opened positions.

In addition, according to Bloomberg, President Trump is having trouble staying on track with his plan to reduce the US trade deficit, which was one of his main economic goals. It is evident that US President’s trade wars are starting to influence both the domestic and worldwide economic growth, while his battles have caused increased public spending and have encouraged domestic investment, leading to overall deficit growth. A Syracuse University economist, Mary Lovely, does not see Trump’s trade policy to have a big impact on the overall trade deficit in the long run, however is the trade wars do affect the business confidence, a reduction in the US trade deficit is possible but with damaging effects on the employment and economic activity. Globally, the effect of the trade wars is already seen with the manufacturing surveys that are reporting a decline in export orders, as well as a decline in the auto production.

German factory orders are already reacting on the trade threats coming from the US, where the industrial orders fell unexpectedly in July, caused by a weak foreign demand. As per the numbers released on Thursday, German factory orders were down by 0.9%, while the forecast was a rise of 1.8%. However, despite the weak data seen yesterday, the economist are still positive that Germany will have a strong economic upturn, mostly supported by private consumption, and assisted by strong income growth and rising employment.

ECONOMIC CALENDAR EVENTS FOR SEPTEMBER 7th

NZD RBNZ Gov Orr Speaks
JPY Average Cash Earnings y/y
AUD Home Loans m/m
EUR German Industrial Production m/m
EUR German Trade Balance
CAD Employment Change
CAD Unemployment Rate
USD Average Hourly Earnings m/m
USD Non-Farm Employment Change
USD Unemployment Rate

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