The dollar is extending its recent weakness against its major competitors Wednesday, after private sector employment growth fell short of expectations. The report is views as an early indicator for the U.S. employment report, which is slated to be released at the end of the trading week.
In another sign of sluggishness in the U.S. labor market, payroll processor ADP released a report Wednesday morning showing that private sector employment increased by much less than expected in the month of April.
ADP said employment in the private sector increased by 169,000 jobs in April compared to a downwardly revised increase of 175,000 jobs in March. Economists had expected private sector employment to climb by about 200,000 jobs compared to the addition of 189,000 jobs originally reported for the previous month.
Labor productivity in the U.S. showed another notable decrease in the first quarter of 2015, according to a report released by the Labor Department on Wednesday. The report said labor productivity fell by 1.9 percent in the first quarter following a 2.1 percent decrease in the fourth quarter. The continued drop in productivity matched economist estimates.
Meanwhile, the Labor Department said unit labor costs surged up by 5.0 percent in the first quarter after jumping by 4.2 percent in the fourth quarter. Economists had expected costs to increase by 4.5 percent.
Federal Reserve Chair Janet Yellen said Wednesday that “Equity market valuations at this point generally are quite high,” and warned that “there are potential dangers there.”
“We’ve also seen the compression of spreads on high-yield debt, which certainly looks like a reach for yield type of behavior,” Yellen said.
Yellen made the comments at a joint appearance with International Monetary Fund Managing Director Christine Lagarde.
While excessive risk taking may be seen in stocks, risks to financial market stability are moderate at the moment, she added.
The dollar has extended yesterday’s losses against the Euro on Wednesday dropping to over a 2-month low of $1.1367. The U.S. currency has since bounced back to around $1.1340.
Eurozone retail sales declined in March for the first time in six months as both food and non-food product turnover decreased from February. Retail sales volume dropped 0.8 percent month-on-month in March, reversing a 0.1 percent rise in February, Eurostat reported Wednesday. This was the first decline since September and was larger than an expected drop of 0.7 percent.
Eurozone private sector growth slowed slightly less than initially estimated in April, final data from Markit Economics showed Wednesday. The composite output index fell slightly to 53.9 in April from 54 in March. The flash score was 53.5. The rate of expansion in economic output held broadly steady at March’s 11-month high.
Germany’s private sector growth weakened more than initially estimated in April, data from Markit revealed Wednesday. The composite output index fell to 54.1 in April from an eight-month high of 55.4. It was also below the flash score of 54.2. The latest index reading still indicates solid output growth.
The French private sector growth eased further in April but it slowed less than previously estimated, final data from Markit showed Wednesday. The composite output index fell to 50.6 in April from 51.5 in March. The reading signals a marginal growth rate. The flash score was 50.2.
The National Institute of Economic and Social Research on Wednesday downgraded its growth outlook for the U.K. ahead of Thursday’s general election. The think tank forecast 2.5 percent economic growth this year, which was weaker than the 2.9 percent projected in February. For 2016, the think tank estimated 2.4 percent growth.
The buck has added to yesterday’s losses against the pound sterling, falling to a 3-day low of $1.5291. The dollar has risen back to around $1.5250 this afternoon.
The British services sector grew the most in eight months in April, led by marked gains in new business, which prompted firms to continue with robust pace of job creation, survey results from Markit Economics revealed Wednesday. The seasonally adjusted Markit/CIPS UK Services Purchasing Managers’ Index for the services sector rose to 59.5 from 58.9 in March. Economists had expected a score of 58.5.
The greenback has dropped to a 3-day low of Y119.395 against the Japanese Yen on Wednesday, from yesterday’s high of around Y120.500.
The material has been provided by InstaForex Company – www.instaforex.com