Wage growth starting to pick up
More employers saying they will train workers themselves
The strong performance reflected sharp expansions in output and new orders. Strong client demand meant operating capacity came under greater strain, with backlogs increasing at the fastest pace since September 2015 and supplier delivery times lengthening to the greatest extent on record. Strong demand for inputs contributed to a sharp rise in purchasing costs, which in turn fed through to a marked rise in output prices.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers' Index registered 56.4 in May, down fractionally from 56.5 in April. T
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in May. In manufacturing, the workweek decreased by 0.2 hour to 40.8 hours, and overtime edged down by 0.2 hour to 3.5 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.8 hours.
In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents to $26.92. Over the year, average hourly earnings have increased by 71 cents, or 2.7 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.59 in May.
Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in several industries, including retail trade, health care, and construction.
The unemployment rate edged down to 3.8 percent in May, and the number of unemployed persons declined to 6.1 million. Over the year, the unemployment rate was down by 0.5 percentage point, and the number of unemployed persons declined by 772,000.
The seasonally adjusted IHS Markit/CIPS Purchasing Managers' Index rose to 54.4, up slightly from April's 17-month low of 53.9, to signal growth for the twenty-second straight month. The improved trend signalled by the PMI masked several areas of potential concern. Although growth of production accelerated to its best during the year-so-far, this was mainly achieved through the steepest build-up of finished goods inventories in the 26-year survey history and a sharp reduction in backlogs of work.
The upturn in the eurozone manufacturing sector showed further signs of cooling in May. Rates of expansion in output and new orders both slowed, with increases in employment and backlogs of work also losing momentum. Input cost inflation rose for the first time in four months, whereas the rate of increase in output charges slowed further. The final IHS Markit Eurozone Manufacturing PMI® posted a 15-month low of 55.5 in May, down from 56.2 in April.
May saw a further slowdown in the pace of growth of Germany's manufacturing sector, with output, new orders and employment all rising at a weaker rate. Business confidence was also found to have deteriorated, with expectations towards future output the lowest for over two-and-a-half years. Rising oil prices and ongoing capacity constraints in supply chains meanwhile added further pressure on manufacturers by way of an acceleration in input cost inflation.
The headline IHS Markit/BME Germany Manufacturing PMI - a single-figure snapshot of the performance of the manufacturing economy - registered 56.9 in May, down from 58.1 in April.
There were further signs of growth easing in the Spanish manufacturing sector during May, with weaker increases in output and new orders recorded. That said, the rate of job creation accelerated and business confidence remained elevated. Meanwhile, the rate of input cost inflation was sharp and output prices rose at the fastest pace since January.
The headline IHS Markit Spain Manufacturing PMI - a composite single-figure indicator of manufacturing performance - dipped to 53.4 in May from 54.4 in April. Although signalling a solid strengthening in the health of the sector, the rate of improvement was the weakest since August last year. Business conditions have strengthened on a monthly basis throughout the past four-and-a-half years.
Italy's manufacturing sector continued to expand during May, but again at a slower rate as signs of softer demand, especially from abroad, translated into weaker gains in output and new orders. Companies nonetheless took on extra staff and were able to make notable inroads into their backlogs of work. On the price front, cost pressures continued to intensify as shortages of stock and rising demand empowered suppliers. Output charges were raised again, but at the slowest rate of the year so far.
The headline IHS Markit Italy Manufacturing Purchasing Managers' Index - a singlefigure measure of developments in overall business conditions - fell to 52.7 during May, down from 53.5 in the previous month and the lowest level for a year-and-a-half. Having hit a near seven-year high of 59.0 at the start of the year, the PMI continues to lose noticeable momentum.
Preliminary estimates for May indicate that the index increased by 0.3 per cent (on a monthly average basis) in SDR terms, after decreasing by 4.0 per cent in April (revised). The rural and base metals subindices increased in the month, while the non rural index was unchanged. In Australian dollar terms, the index increased by 0.6 per cent in May.
Over the past year, the index has increased by 3.6 per cent in SDR terms, led by higher LNG, thermal coal and oil prices. The index has increased by 6.1 per cent in Australian dollar terms.
Consistent with previous releases, preliminary estimates for iron ore, coking coal, thermal coal and LNG export prices are being used for the most recent months, based on market information. Using spot prices for the bulk commodities, the index increased by 2.2 per cent in May in SDR terms, to be 7.5 per cent higher over the past year.
EUR/USD
Resistance levels (open interest**, contracts)
$1.1820 (2262)
$1.1756 (3056)
$1.1721 (2115)
Price at time of writing this review: $1.1676
Support levels (open interest**, contracts):
$1.1615 (2763)
$1.1579 (4416)
$1.1538 (2219)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date June, 8 is 164072 contracts (according to data from May, 31) with the maximum number of contracts with strike price $1,1500 (6156);
GBP/USD
Resistance levels (open interest**, contracts)
$1.3423 (588)
$1.3388 (198)
$1.3360 (204)
Price at time of writing this review: $1.3276
Support levels (open interest**, contracts):
$1.3211 (984)
$1.3175 (785)
$1.3135 (210)
Comments:
- Overall open interest on the CALL options with the expiration date June, 8 is 39291 contracts, with the maximum number of contracts with strike price $1,3600 (2292);
- Overall open interest on the PUT options with the expiration date June, 8 is 43456 contracts, with the maximum number of contracts with strike price $1,3400 (2256);
- The ratio of PUT/CALL was 1.11 versus 1.09 from the previous trading day according to data from May, 31.
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Survey data indicated softer growth momentum in the Japanese manufacturing sector during May, reversing the acceleration recorded in April. Although both output and new orders continued to rise, the rates of expansion weakened. In turn, backlogs of work were accumulated at a slower pace, prompting a moderation in the rate of job creation. Meanwhile, material shortages led to both longer supplier delivery times and greater input prices. Firms responded by modestly raising selling prices.
The headline Nikkei Japan Manufacturing Purchasing Managers' Index - a composite single-figure indicator of manufacturing performance - fell to 52.8 in May, from 53.8 in April, signalling a slower rate of improvement in the Japanese goods producing sector.
Growth in production and new orders picked up slightly from April, while firms reported a further fall in new export sales. At the same time, companies reduced staffing levels again as part of efforts to cut costs and raise efficiency. This, in part, drove a further increase in outstanding workloads. Inflationary pressures meanwhile intensified, with both input costs and output charges rising at solid rates. Although confidence towards the 12-month outlook for production improved in May, optimism remained subdued by historical standards. The headline seasonally adjusted Purchasing Managers' Index - a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy - was unchanged from the previous month at 51.1 in May. The reading signalled a further modest improvement in the health of the sector. Operating conditions have now strengthened in each month for the past year.
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