What happened: The latest report from the Department of Labor showed that the number of Americans filing new claims for unemployment benefits fell 14,000 to 340,000 last week, matching market forecasts. The 4-week moving average – used to smooth out weekly volatility and discern longer-term trends – tumbled to 355,000, a drop of 11,750 from the previous week’s revised average.
2.7 million people continued to collect jobless benefits under regular state programs in the week ending August 21, and in the week prior to that, 12.19 million were receiving payouts under all federal programs.
Supplementary unemployment benefits will end this week: While the added payouts technically expire on September 6, workers will be receiving their last check on Friday, leaving an estimated 7.5 million citizens without any sort of unemployment-related income.
Private job creation missed expectations yesterday: According to numbers published by ADP, the private sector generated 375,000 jobs in August – 250,000 below consensus market forecasts. But the report has historically had a poor record in predicting non-farm payrolls – in July, for example, the ADP estimate was nearly twice as weak as the official print from the Department of Labor.
A strong August non-farm payrolls report is expected: Yesterday’s Purchasing Managers’ Index data showed an increase in new orders and output from US manufacturers, suggesting that the domestic demand and economic activity levels remain strong. The report also indicated that business confidence and backlogs of work increased in August, which should have given firms more incentives to expand their workforce (although businesses also reported that they found it harder to retain staff and find suitable candidates for open positions).
But some states may drag national statistics down: The pandemic continues to ravage less-vaccinated states – mostly located in the south-eastern part of the country. Louisiana is experiencing record hospitalizations, Florida is coping with a record number of average deaths per day, South Carolina is nearing a new peak in infections, and Mississippi’s number of new cases is at an all-time high. And, although some states have been able to accelerate the rollout over the past few weeks, the vaccine hesitancy movement remains strong, leaving many citizens vulnerable to infection.
Consensus estimates suggest that employers added 720,000 payrolls last month and that the unemployment rate ticked lower to 5.2 percent from 5.4 percent.
Meanwhile, China is fighting its own battles: The country’s Purchasing Managers’ Index featured a worsening in business conditions in August, as a COVID-19 flareup led the government to impose new social-distancing restrictions. New orders and output fell in the country, and suppliers’ production capabilities were diminished – causing further shortages of input materials. This was the first time that business conditions have worsened since April 2020, with the index hitting its lowest level in nearly 18 months. This is likely to put downward pressure on the global growth outlook and intensify the supply shortages and order delays that the US has been experiencing.
“Cambridge Global Payments” is a trade name, which in this document refers specifically to one or more of these legal entities: Cambridge Mercantile Corp., Cambridge Mercantile Corp. (U.S.A.), Cambridge Mercantile Corp. (Nevada), Cambridge Mercantile (Australia) Pty. Ltd.
Cambridge Global Payments (“Cambridge”) provides this document as general market information subject to: Cambridge’s copyright, and all contract terms in place, if any, between you and the Cambridge entity you have contracted with. This document is based on sources Cambridge considers reliable, but without independent verification. Cambridge makes no guarantee of its accuracy or completeness. Cambridge is not responsible for any errors in or related to the document, or for damages arising out of any person’s reliance upon this information. All charts or graphs are from publicly available sources or proprietary data. The information in this document is subject to sudden change without notice.
Cambridge may sell to you and/or buy from you foreign exchange instruments (including spot and/or derivative transactions; both kinds are here called “FXI”s) covered by Cambridge on a principal basis.
This document is NOT: 1) Advice of any kind, or 2) Approved or reviewed by any regulatory authority, or 3) An offer to sell or a solicitation of an offer to buy any FXIs, or to participate in any trading strategy.
Before acting on this document, you must consider the appropriateness of the information, based on your objectives, needs and finances. For advice, you must contact someone independent of Cambridge.
Certain FXIs mentioned in this document may be ineligible for sale in some locations, and/or unsuitable for you. Contact your Cambridge representative for further information regarding product availability/suitability before you enter into any FXI contract.
FXIs are volatile and may cause losses. Past performance of a FXI product cannot be relied on to determine future performance.
This document is intended only for persons in Canada, the US, and Australia. This document is not intended for persons in the UK or elsewhere in the EEA. In Australia, this publication has been distributed by Cambridge Mercantile (Australia) Pty. Ltd. (ABN 85 126 642 448, AFSL 351278); for the general information of its customers (as defined in the Corporations Act 2001). This entity makes no representations that the products or services mentioned in this document are available to persons in Australia or are necessarily suitable for any particular person or appropriate in accordance with local law.
Fees may be earned by Cambridge (and its agents) in respect of any business transacted with Cambridge.
The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact the applicable Cambridge if you wish to use Cambridge services to enter a transaction involving any instrument mentioned in this document.
© Copyright 2018, Cambridge Mercantile Corp., ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Cambridge Mercantile Corp. See www.cambridgefx.com for contact details.