Economic data are great, what to expect ahead of NFP?
Yesterday, the US ADP employment increased by 455,000 in March, more than 450,000 market estimates. Data show that the US labor market overall added nearly 1.5 million jobs in the first quarter of this year.
This is while JOLTs job vacancies in the United States hovered near an all-time high of 11.266 million in February, and it shows that the US labor market still facing a supply shortage.
On the other hand, the final annualized quarterly rate of the core PCE price index in the fourth quarter was recorded at 5%, in line with market expectations and the previous value. High inflation has weakened spending power, and the final quarterly rate of real personal consumption expenditures is only 2.5%, compared with 3.1% previously. GDP also weakened slightly to 6.9%, below market expectations of 7.1%, and the previous reading at 7.0%.
And today, according to the Bureau of Economic Analysis now we can see that Personal Spending rose only 0.2% in February, despite that personal income rose a more respectable 0.5%.
While published data especially the Federal Reserve's preferred measure of inflation, posted another fast increase, however, if we consider the inflation, we can see that spending had fallen by 0.4%.
Personal consumption expenditures on a monthly scale rose 0.6% in February, to lift the annual rate to 6.4%. The core PCE inflation also rose to 5.2% in February. Both figures represent 40-year highs. Since the PCE Price index, is quicker to reflect changes in prices of goods and services that are bought more regularly, usually, FED looking more closely to find the real inflation direction and expectations to count on its outlooks and policies.
And finally, ahead of tomorrow’s NFP numbers, initial jobless claims unexpectedly increased to 202,000 last week, but continuing claims are down to a new 60-year low of 1.307 million.
If we just exclude the inflation, data show an acceptable recovery, especially those related to before the start of the war. The war increased the higher inflation duration, therefore, if we can end the conflict a bit earlier, still we can hope that the paused recovery will be resume again and it is still possible to count on another development in the economy and stock markets.
As we can see in the below figure, in the daily chart, Dow Jones again is back to the bullish tone, trading well above its key technical level at 34,400 US dollars. As long as DJI holds this level, bulls will have full control of markets. On the flip side, bears can be seen in the charts, only under 33,000.
