Financial and Economic Brief - June 6, 2017by © Liberty Publishing, Inc.
May Jobs Numbers Lower Than Expected
Overall, there was “weak hiring and sluggish wage growth” in May. There were 138,000 jobs added, and average hourly wages rose just 2.5% on an annual basis. Economists had expected job growth to be 185,000. The unemployment rate fell to 4.3% from 4.4%, but the number of people in the workforce declined. “While the Fed still struggles to go in June, the one big takeaway from this report is that a September rate hike is largely off the table. September was always going to be a struggle because of its proximity to the debt ceiling debate,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.
Yuan Rises Against Dollar
The yuan rose 0.5% against the dollar on Thursday, bringing its progress in the past four trading days to 1.2%. Currency traders say the recent rise is most likely about Beijing proving a point to its critics. In particular, Chinese officials were infuriated by a downgrade last week from credit rating agency Moody's. “There is a possibility that the authorities want to squash any worries” about China's debt burden after the Moody's announcement, Jason Daw, a currency strategist at Societe Generale, wrote in a research note Thursday. The yuan's “surge” is changing some analysts’ opinions on what it will do next.
New Factory Orders Drop
According to the Commerce Department, new orders fell in April for the first time in five months. In fact, factory goods orders dropped 0.2%, after a 1.0% increase in March. However, factory orders were up 4.4% from a year ago. Manufacturing is being supported by a recovery in the energy sector that has led to demand for oil and gas drilling equipment. But a slowdown in motor vehicle sales could hurt production in the coming months. The government reported on Friday that employment at motor vehicles and parts manufacturers fell by 1,500 jobs in May.