LIVE MARKETS-Past is prologue: Downbeat data ahead of May payrolls

Reuters
05 Jun
LIVE MARKETS-Past is prologue: Downbeat data ahead of May payrolls

Main US indexes up; Nasdaq in the lead

Info tech up most among S&P sector gainers; staples biggest laggard

Euro STOXX 600 index up ~0.1%; ECB cuts 25 bps

Dollar off; gold dips; bitcoin up; crude gains ~1%

US 10-Year Treasury yield rises to ~4.39%

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PAST IS PROLOGUE: DOWNBEAT DATA AHEAD OF MAY PAYROLLS

A spate of soft data on Thursday seemed to set the table for a disappointing May employment report.

Last week, 247,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, an unexpected 3.3% weekly increase, overshooting consensus by 8,400.

That's the highest initial claims print since October, and the underlying trend, as expressed by the four-week moving average of initial claims, now has an upward bias, suggesting layoffs are on the upswing.

While last week's claims data falls outside the survey period for the May jobs report, it's the latest in a string of soft labor market indicators.

Speaking of which, a separate report from executive outplacement firm Challenger Gray & Christmas $(CGC.AU)$ USCHAL=ECI showed that in May, corporate America announced it would lay off 93,816 workers, or 11% fewer than in April, but a 47% increase over May 2024.

From January through May, 696,309 job cuts have been announced. That's 80% more than the 385,859 announced in the first five months of last year.

"Tariffs, funding cuts, consumer spending, and overall economic pessimism are putting intense pressure on companies’ workforces," writes Andrew Challenger, CGC's senior vice president. "Companies are spending less, slowing hiring, and sending layoff notices."

So far this year, the government - largely as a result of billionaire Elon Musk's DOGE efforts - has cut 284,827 jobs. That's 41% of total year-to-date layoffs.

Ongoing jobless claims USJOBN=ECI, reported on a one-week lag, essentially held steady at 1.904 million, or a scant 6,000 fewer than analysts expected. The number remains elevated and supports recent consumer survey data suggesting laid off workers are finding it increasingly difficult to find a replacement gig.

"The latest jobless claims data are signaling looser labor market conditions, with an uptick in initial claims suggesting layoffs may be rising while the elevated level of continuing claims confirms it is difficult for unemployed workers to find new jobs," says Nancy Vanden Houten, lead economist at Oxford Economics.

The trade gap USTBAL=ECI, or the difference in the value of goods and services imported to the U.S. and those exported abroad, narrowed in April by 55.5% to $61.6 billion.

The reading is 12% narrower than economist predictions, notching the lowest trade deficit since November 2023.

"The economy has essentially hit pause on discretionary imports and is now working off inventories as businesses and consumers delay spending and wait for clarity on tariffs,” says Nationwide Financial Markets Economist Oren Klachkin.

Under the hood, Trump's erratic tariff policies are starting to sting; a 3.0% increase in exports was handily obliterated by a 16.3% drop in imports, which account for the lion's share of the United States' total international trade.

Here's a look at plunging imports from three of the United States' biggest trading partners: Canada, China and Mexico.

Turning back to the jobs market, the Labor Department revised its first-quarter labor cost USLCA=ECI and productivity USPROR=ECI growth data, bumping the former up to 6.6% from 5.7% and slashing the latter to a 1.5% decline from the originally stated 0.8% dip.

Both numbers are expressed in quarterly annualized percent change.

All of this is prologue to the May employment report, due Friday morning. Economists polled by Reuters expect it to show the U.S. economy added 130,000 jobs last month, leaving the unemployment rate unchanged at 4.2%.

(Stephen Culp)

*****

EARLIER ON LIVE MARKETS:

ROBINHOOD PRIME CANDIDATE TO JOIN S&P 500 IN REBALANCE, BOFA SAYS CLICK HERE

US STOCKS STEP BACK, BUT DEFENSE SHARES ATTEMPT TO CONTINUE TO GEAR UP CLICK HERE

WITH TECH ON A TEAR, NASDAQ TARGETS ITS HIGHS CLICK HERE

ISRAELI SHEKEL MAY NOT BE THE POSTER BOY FOR DISINFLATION STORY CLICK HERE

RETAIL INVESTORS TAKE ON RISKIER BETS DESPITE UNCERTAINTIES CLICK HERE

SPECULATORS STAY PUT ON WEAKENING CONSUMER CONFIDENCE - HAZELTREE CLICK HERE

EUROZONE BANK VALUATION REVIVAL TO CONTINUE - UNICREDIT CLICK HERE

QUIET START, TRAVEL SECTOR TOP FALLER CLICK HERE

BEFORE THE BELL: AWAITING THE ECB, AND NATO MEETING CLICK HERE

SWITCH 2 DEBUTS BUT NO FUN-AND-GAMES IN TRADE CLICK HERE

earlytrade06052025 https://tmsnrt.rs/43JDhy6

Initial claims https://www.reuters.com/graphics/USA-STOCKS/zjvqardbkvx/initialclaims.png

Continuing claims and jobs confidence https://www.reuters.com/graphics/USA-STOCKS/xmvjjaqmkvr/contclaims.png

Imports from China Mexico and Canada https://www.reuters.com/graphics/USA-STOCKS/byprxgbwape/imports.png

Productivity and labor costs https://www.reuters.com/graphics/USA-STOCKS/gkvljnqodvb/prodcosts.png

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