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LGT Navigator: Focus on labor market report from Washington

July 2, 2021

The focus today is on the monthly labor market statistics from the US, which in turn also has a direct impact on the monetary policy stance of the Federal Reserve. In the run-up, Wall Street continued to show top form, supported by positive economic indicators and the prospect of infrastructure investments worth billions. Meanwhile, in Asia and Europe, uncertainty over the spread of the delta variant of the coronavirus overshadowed stock market sentiment.  

Focus on labor market report from Washington

In New York, the market-wide S&P 500 gained +0.52% to 4'319.94 points and at times reached another record high. The Dow Jones Industrial ended Thursday's trading at 34'633.53 points (+0.38%) and is again approaching the mark of 35'000 points. In Asia's stock markets, the spread of the Delta Covid-19 variant causes restraint.

With excitement, investors expect the US labor market report to be published this afternoon at 14:30 (CET). Analysts expect a strong increase of 700'000 jobs (outside the agricultural sector). In May, an increase of 559'000 jobs was published. A positive sign was also the data published yesterday on initial claims for unemployment benefits in the US. Last week, the number of initial claims fell more than anticipated by 51'000 to 364'000.

US industry remains on solid growth track, but burdened by capacity bottlenecks

The Institute for Supply Management's (ISM) Purchasing Managers Index slipped 0.6 points to 60.6 in June, slightly more than analysts (consensus 61.0) had expected. The ongoing recovery in the industrial sector is being weighed down by shortages of materials and labor.

Withdrawal of dividend moratorium in consideration according to ECB chief Lagarde

European Central Bank (ECB) President and Chair of the Systemic Risk Board (ESRB) Christine Lagarde said that the recommendation to commercial banks to refrain from paying dividends could soon be withdrawn. Speaking at a hearing of the European Parliament's Economic and Monetary Affairs Committee, Lagarde said the ESRB council would discuss this at its next meeting on September 23.

Euro industry growing at record pace

The recovery in the industrial sector in the eurozone continued in June. The Purchasing Managers' Index (PMI) from London-based IHS Markit improved for the fourth month in a row, climbing to 63.4 points from 63.1 in May (analyst consensus 63.1). The survey results also make clear that companies have raised their prices more than at any time since the start of the data series due to strong demand coupled with limited supply.

In the 19-euro countries, the situation on the labor market improved on average. According to Eurostat, the statistics office, the unemployment rate fell from 8.1% in April to 7.95 in May. Accordingly, 12.8 million people in the eurozone were without a permanent job. In the EU, the figure was 15.28 million.

British industry faces headwinds

Industrial companies in the UK were surprisingly more negative in the latest survey by IHS Markit. For example, the Purchasing Managers' Index fell more sharply than expected in June from the record high of 65.6 points registered in May to 63.9 points. Nevertheless, the British industry remains on a solid growth path.

Economic Indicators July 2

MEZ Country Indicator Last period
08:00 GE Retail Sales (May, y/y) +4.4%
11:00 EZ Producer Prices (June, y/y) +7.6%
14:30 US Non-Farm Payrolls (June) +559,000
14:30 US Unemployment Rate (June) 5.8%
14:30 US Trade Balance (May) USD -68.9bn
14:30 EZ ECB President Lagarde speech

 

Earnings Calender July 2

Country Company Period
USA Ford Motor Q2

 

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Editor: Alessandro Fezzi, +41 44 250 78 59, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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