US data reviewed - Nomura

Analysts at Nomura offered their review of the US data today that arrived upbeat and underpinned the notion for further rate hikes from the Fed this year.

Key quotes:

"Initial jobless claims: Initial jobless claims increased marginally by 11k to 222k in the week ending 12 May, while the four-week average declined 3k to 213k. Given that this week’s initial claims reading corresponds to the BLS survey week for the May employment report, low readings are consistent with a strong month of payroll gains. Continuing claims decreased 87k to 1707k, the lowest reading since December 1973, bringing the insured unemployment rate down 0.1pp to 1.2%. Continuing claims have recently fallen sharply, consistent with our view that the unemployment rate should gradually fall further this year."

"Philly Fed survey: The Philly Fed general business conditions index jumped 11.2pp to 34.4 in May, well-above the six-month average of 26 and above expectations (Nomura: 20, Consensus: 21). Meanwhile, the Philly Fed new orders index increased 22.2pp to 40.6, the highest reading since the 1970s. However, capital expenditure expectations tempered further in the May survey, suggesting that perhaps the recent momentum in equipment investment is moderating That said, we remain optimistic that favorable provisions in the 2017 tax law should help foster increased investment this year. Overall, the Philly Fed survey results today are consistent with the Empire State release earlier this week, suggesting healthy May manufacturing activity."

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