1 May 2015
US data not supporting a June hike - ING
FXStreet (Guatemala) - James Knightley, analyst at ING Bank explained that today’s US data isn’t particularly helpful for those looking for a June rate hike.
Key Quotes:
"The April manufacturing ISM index came in at 51.5, the same as in March, but below the 52.0 consensus figure."
"That said, the activity numbers weren’t all that bad with actual production rising to 56.0 from 53.8 while new orders rose to a four month high, albeit well down on the 60+ levels seen in 4Q14. Interestingly, new export orders actually strengthened despite plenty of commentators suggesting that dollar strength is damaging the US economy and should mean that the Fed delays policy tightening."
"There was more support for an “on hold” Fed from the weakness seen in the employment component of the ISM report. It dropped from the break-even 50.0 level in March to 48.3, indicating that the sector saw job losses in April."
"This is the weakest jobs number since September 2009 and it supports our view that after 1Q15’s economic weakness, labour market hiring will take a little while to pick up – hence our sub consensus 185,000 call for next Friday’s payrolls figure."
"We have also seen a big fall in construction spending in March (-0.6%MoM versus consensus forecast of a 0.5% rise) while the April final reading of University of Michigan sentiment was unchanged from the preliminary figure of 95.9."
"Taking it all together, the numbers are a little disappointing and if the jobs data is indeed on the softer side of expectations next Friday it will make a June rate hike look unlikely."
Key Quotes:
"The April manufacturing ISM index came in at 51.5, the same as in March, but below the 52.0 consensus figure."
"That said, the activity numbers weren’t all that bad with actual production rising to 56.0 from 53.8 while new orders rose to a four month high, albeit well down on the 60+ levels seen in 4Q14. Interestingly, new export orders actually strengthened despite plenty of commentators suggesting that dollar strength is damaging the US economy and should mean that the Fed delays policy tightening."
"There was more support for an “on hold” Fed from the weakness seen in the employment component of the ISM report. It dropped from the break-even 50.0 level in March to 48.3, indicating that the sector saw job losses in April."
"This is the weakest jobs number since September 2009 and it supports our view that after 1Q15’s economic weakness, labour market hiring will take a little while to pick up – hence our sub consensus 185,000 call for next Friday’s payrolls figure."
"We have also seen a big fall in construction spending in March (-0.6%MoM versus consensus forecast of a 0.5% rise) while the April final reading of University of Michigan sentiment was unchanged from the preliminary figure of 95.9."
"Taking it all together, the numbers are a little disappointing and if the jobs data is indeed on the softer side of expectations next Friday it will make a June rate hike look unlikely."