The United States released a batch of economic data on Wednesday that could give markets clues to the outcome of Friday’s U.S. nonfarm payrolls report:
the Challenger Report The data showed that U.S. employers announced 48,786 job cuts in June, down 23.6% from May but still 19.8% higher than June 2023.
Link to June Challenger Report
the ADP Report The net gain of 150,000 jobs in June was lower than the expected gain of 163,000 and the increase of 157,000 jobs in May.
The details revealed that the annual wages of those who remained in their jobs rose by only 4.9%, the lowest level since August 2021, while the wages of those who changed jobs slowed from 7.8% to 7.7%.
A separate report showed Initial weekly unemployment claims Lease renewal applications rose to 238,000 from 234,000 in the week ended June 29, beating market estimates of a 234,000 increase.
As expected, the closely watched four-week moving average rose 2,250 to 238,500 from the previous week.
Link to the Labor Department’s initial weekly unemployment claims report
the S&P Global Services PMI The June PMI provided some relief, with the final June reading revised up from 55.1 to 55.3 even though it was down from May’s 54.8.
The report said that “the rate of job creation was strong and the sharpest since May 2023,” and that service providers increased their prices at a “strong, if slightly weaker” pace than in May.
Link to S&P Global Services PMI Final
finally, ISM Services Purchasing Managers’ Indexwhich many consider a somewhat more accurate leading indicator, surprised markets with a sharp decline from May to June.
The report came in at a contractionary reading of 48.8 points in June, which is much lower than the expected reading of 52.6 and the May figure of 53.8 points.
Link to the June ISM Services PMI
And if that wasn’t weak enough, closely watched components like prices and employment also weakened compared to the previous month.
Market Reactions
US Dollar vs Major Currencies: 5 minutes
Comparison between the US dollar and major currencies Chart by TradingView
The US dollar, which had started to retreat from its highs at the beginning of the European session, saw new broad-based downward pressures after the release of the Challenger and ADP reports.
Shortly after, a major glitch in the ISM services PMI report caused a more pronounced decline in the US dollar, sending the currency to new lows in July against its major peers.
Fortunately for US dollar investors, the greenback was able to recoup some of its losses after the ISM PMI release ahead of the FOMC minutes and the US July 4 bank holiday.
