ADP jobs report beats expectations with very bullish print, Canada maintains base rate at 1%, whilst USA trade gap shrinks on record exports figure
The USA ADP jobs report, that traditionally precedes the NFP data delivered on the next Friday (this Friday), came in well ahead of the expectations from the economists polled. At 215K it was circa 30K better than expectations, whilst the previous month’s figure was revised up to 185K jobs created. Eyes will now turn to the NFP jobs print to see if this healthy jobs print will carry over to the NFP data.
The USA’s balance of payments shrunk unexpectedly in October, record exports were achieved for the month at $192.7 bn with imports shrunk to $233 bn, ensuring that the balance was a negative $40.6 bn.
In other news Canada’s base interest rate was kept at 1%, whilst economy activity according to the ISM USA non-manufacturing report slipped to 53.9 from 55.4 the previous month.
November 2013 Non-Manufacturing ISM Report On Business
Economic activity in the non-manufacturing sector grew in November for the 47th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business. The report was issued today by Anthony Nieves, CPSM, C.P.M., CFPM, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee.
The NMI registered 53.9 percent in November, 1.5 percentage points lower than October’s reading of 55.4 percent. This indicates continued growth at a slower rate in the non-manufacturing sector.
Bank of Canada maintains overnight rate target at 1 per cent
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent. The global economy is expanding at a modest rate, as the Bank expected. Although growth in several emerging markets has continued to ease, growth in the United States during the third quarter of 2013 was stronger than forecast. Even if some of this pickup was due to temporary factors, the data are consistent with the Bank’s view of gathering momentum in the U.S. economy.
US International Trade in Goods and Services: October 2013
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total October exports of $192.7 billion and imports of $233.3 billion resulted in a goods and services deficit of $40.6 billion, down from $43.0 billion in September, revised. October exports were $3.4 billion more than September exports of $189.3 billion. October imports were $1.0 billion more than September imports of $232.3 billion. In October, the goods deficit decreased $2.2 billion from September to $60.2 billion.
ADP: Private Sector Employment Increased by 215,000 Jobs in November
Private sector employment increased by 215,000 jobs from October to November, according to the November ADP National Employment Report. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total non-farm private employment each month on a seasonally-adjusted basis. Goods-producing employment rose by 40,000 jobs in November.
Market overview
The DJIA closed down marginally at 15889, by 0.16%. The SPX closed down 0.13% and the NASDAQ closed up 0.02%. European markets sold off for the second day quite sharply; STOXX by 0.73%, CAC by 0.57%, DAX by 0.90% and the UK FTSE by 0.34%. The DJIA future is currently, at the time of writing (10:30 PM UK time Wednesday 4th December), up 0.03%, the SPX future is up 0.07% and the NASDAQ up 0.23%. Euro STOXX future is down 0.86%, DAX down 0.95%, CAC down 0.60%, FTSE down 0.41%.
NYMEX WTI oil closed up 1.30% on the day at $97.29 per barrel due to USA storage figures being down substantially. NYMEX natural gas was down on the day by 0.18% at $3.97 per therm. COMEX gold was up 1.83% on the day at $1243.00 per ounce with silver rebuilding sharply also up 3.20% on the day at $19.68 per ounce.
Forex focus
The yen rallied 0.2 percent to 102.36 versus the dollar late in New York, after touching 103.38 Tuesday, the weakest level since May 23rd. The U.S. currency was little changed at $1.3593 per euro. The yen gained 0.1 percent to 139.13 per euro. The U.S. Dollar Index, which tracks the U.S. currency versus its 10 major counterparts, was little changed at 1,020.94, after rising to 1,025.36 yesterday, the highest level since Sept. 13th. The yen rallied for a second day against the dollar as stronger-than-forecast U.S. economic data spurred speculation the Federal Reserve will reduce stimulus that has driven up stocks globally.
Bank of Canada policy makers kept the benchmark rate on overnight loans between commercial banks at 1 percent, where it’s been for more than three years, as forecast by all 22 economists in a Bloomberg survey. The Canadian dollar fell 0.3 percent to C$1.0684 versus the greenback, reaching the lowest level since May 2010.
The pound weakened 0.2 percent to $1.6354 late in London after rising to $1.6443 on Dec. 2nd, the highest since August 2011. Today’s decline was the biggest since Nov. 25. Sterling was little changed at 82.91 pence per euro after appreciating to 82.53 pence on Dec. 2nd, the strongest level since Jan. 11th. The pound weakened from near a two-year high versus the dollar after an industry report showed U.K. service growth slowed more in November than economists forecast.
Bonds
The U.S. 10-year yield rose five basis points, or 0.05 percentage point, to 2.83 percent New York time. It touched 2.85 percent, the highest since Sept. 18th. The price of the 2.75 percent security maturing in November 2023 dropped 14/32, or $4.38 per $1,000 face amount, to 99 9/32. Treasuries slid, pushing 10-year yields to the highest level since September, as industry data showed job growth accelerated more than forecast, adding to bets the Federal Reserve may reduce bond purchases this month.
Fundamental policy decisions and high impact news events that could affect sentiment on December 5th
Thursday witnesses the UK’s BoE MPC publish its interest rate policy decision and the details of its monetary easing policy decision expected to remain the same at 375bn. The statement covering the decisions will be of keen interest to investors. The UK’s chancellor will give his autumn finance statement. Europe’s ECB will publish its rate decision, expected to stay at 0.25%.
Canada reports its building permits and the IVEY PMI expected in at 60.2, whilst the USA publishes its preliminary GDP figures expected in at 3.1%, with unemployment claim numbers at circa 322K for the week. The USA publishes its factory orders, predicted down by 0.7%.
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