Companies in the world’s largest economy unsurprisingly made the smallest expansion in payrolls since May of this year in the month of November, according to the private ADP Institute. With Hurricane Sandy devastation still widely affecting a region responsible for approximately 14% of US labor employment, payrolls was worse than expected. But, when you take a closer look, the report isn’t as bad as some think, lending a short term bullish bias on the US dollar.
According to the survey’s details, payrolls were actually pretty promising, rising by 118,000 for the month. Although the figure drops below market analysts’ estimates of 125,000, there was supportive growth seen in key sectors of the labor market.
Service providers added an impressive 114,000 jobs to payrolls, with larger firms adding the bulk or about 56% of the month’s gains. Construction and manufacturers also made solid contributions to payrolls.
Given storm related disruptions and corporate hesitation to make staff additions ahead of the impending Fiscal Cliff, the report was actually relatively promising. It sets up a potentially stable reading in US non-farm payrolls, which is expected out this Friday. Current estimates are for the survey to show an increase of 93,000 jobs in the month.
Adding to the bullish support was the Institute for Supply Management’s services index.
The non-manufacturing activity report bucked analysts’ estimates, rising above the 53.5 market expectation. In November, activity in the manufacturing sector rose to 54.7 from last month’s 54.2. Even more encouraging were sub-index figures that showed an increase in new orders volume and business activity.
Sub-index findings were subsequently bolstered by a survey that showed a 0.8% rise in factory orders in October.
Ultimately, today’s figures have helped the greenback gain on the day, particularly against currencies like the Japanese yen. Bouncing off of support at 81.50, USDJPY is now trading up through to resistance at 82.70. A close higher would be considered a break from the recent bout of consolidation, leading the way to a test of 84.17 March 15th session high.
Source: FXTrek Intellicharts