Macro Roundup (Jul 4)

SHANGHAI, Jul 4 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

Last night

The US dollar edged lower as President Donald Trump said in a tweet that the US should match China and Europe’s “currency manipulation game.”

“China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA,” Trump said on Twitter. “We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games - as they have for many years!”

The US dollar index, which tracks the greenback against a basket of its peers, slid 0.02% to end at 96.76. 

Growth of activity in China's service sector continued to slow in June, a Caixin/Markit survey showed Wednesday, in line with official data that showed a slight deceleration from the previous month.

The Caixin China services purchasing managers' index (PMI) slipped to 52 in June from 52.7 in May. The reading is the lowest in four months, but remained above the 50 mark that separates expansion of activity from contraction.

Total new business received by service companies rebounded and stood higher than levels for most of last year, driven by government's fiscal policy that encourages spending, said Caixin. But new export orders returned to contraction territory, pointing to subdued foreign demand.

The subindex of employment in the service sector fell further in June, but remained in positive territory, suggesting that the capacity for service providers to absorb labour weakened.

"Overall, China's economy came under greater pressure in June. The conflict between China and the US impacted business confidence rather heavily," said Zhengsheng Zhong, director or of Macroeconomic Analysis at CEBM Group, in a statement accompanying the data.

The US trade deficit grew in May and trade tensions between the US and China helped drive activity in the services sector to a two-year low in June, further signs that economic growth slowed sharply in the second quarter.

The trade deficit rose 8.4% to $55.5 billion as a surge in imports overshadowed a broad increase in exports, the Commerce Department said. 

The goods trade deficit with China, a focus of US President Donald Trump's "America First" agenda, increased 12.2% to $30.2 billion. The expectation of additional duties likely boosted imports from China, which jumped 12.8% in May.

The Institute for Supply Management (ISM) on Wednesday announced that the US non-manufacturing PMI in June fell to 55.1, the lowest since July 2017, from 56.9 in May and also fell short of the market expectation of 56. 

The non-manufacturing business activity index decreased to 58.2, down 3 from 61.2 in May, reflecting growth for the 119th consecutive month, the ISM said in its press release. The new orders index registered 55.8, down 2.8 from May. The employment index decreased by 3.1 to stand at 55 in June.

The number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to sustained labour market strength that should help support a slowing economy.

Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 221,000 for the week ended June 29, compared with an expected slower decline to 223,000, the Labor Department said on Wednesday. Data for the prior week was revised to show 2,000 more applications received than previously reported.

Claims data could become volatile in the coming weeks as auto manufacturers temporarily shut down assembly plants for summer retooling. 

The US created a seasonally adjusted 102,000 private-sector jobs in June, payrolls processor ADP said Wednesday, up from a revised 41,000 in May. May’s numbers were revised higher by 14,000.

The gain was well below the average of average 211,000 jobs created in the three months ending in April.

The Energy Information Administration (EIA) on Wednesday reported that US crude supplies declined by 1.09 million barrels for the week ended June 28, compared with the expected fall of 2.79 million barrels. 

The EIA data also showed that gasoline inventories were down 1.6 million barrels, while distillate stockpiles edged up by 1.4 million barrels last week.

Day ahead

The US will release data on the weekly number of oil rigs, and the eurozone will publish data on its retail sales for May.