Euro zone factory growth continuously slowing down; unexpected acceleration in the UK manufacturing sector; US NFP readings better than expected
On Friday we have seen various macroeconomic news releases, where the UK manufacturing PMI and the US NFP brought surprisingly better than expected readings.
Starting with the news from the Eurozone, the factory growth evidently slowed down to a 15 month low in May, which is assumed to be caused by extra holidays during the relevant month and according to the forward looking indicators, the best case scenario is that it will remain restrained also in the coming months. As per Reuters poll of economists, the ECB will finish the stimulus program by the end of the year. However, the prices in the Eurozone have rose to 1.9% in May, which is close to the ECB’s target. Chief business economist of HIS Markit, Chris Williamson has commented that the weaknesses may be related to the higher than usual number of holidays in the previous month, nevertheless risks appear tilted towards growth remaining passive or even decreasing in the coming months.
With regards to the activity of the manufacturing sector in the UK, it has accelerated unexpectedly in May, where the manufacturing PMI rose to 54.4 last month, as opposed to the forecasted 53.5. However, according to HIS Markit director, Rob Doson, price and supply headwinds and further slowdown in new order growth could endanger further expansion of the manufacturing sector.
In addition, investors were closely looking at the US NFP release on Friday, where it increased by 223k, surpassing the expected 189k. Furthermore, the jobless rate fell from 3.9% to 3.8% and earnings beat the forecasts coming at 0.3%, whereas the expected percentage was 0.2%, all together signaling a good US economic health.
Today we are expecting news first from Australia with the retail sales and company operating profits, followed by the UK construction MI and later during the day, US factory orders will be monitored. However, all are indicating a rather quiet trading day.
ECONOMIC CALENDAR EVENTS FOR JUNE 4th
AUD Retail Sales m/m
AUD Company Operating Profits q/q
GBP Construction PMI
USD Factory Orders m/m