The US labour department report on Friday showed that only 54,000 jobs were added in May, which was much lower than the 175,000 expected. The May unemployment rate also increased 0.1%, to 9.1%. Earlier in the week, the ADP report showed that the private sector only added 38,000 jobs in May.
String of weak economic data
Early in the week, May PMI was announced to be 56.6, which was lower than expected, and the lowest level since November 2009. In addition, May consumer confidence fell to 60.8, lower than the 66.5 that the market expected.
US Housing in Double Dip Recession
On Tuesday, it was official that the US housing sector was in a double-dip recession. In the first quarter of 2011, US house prices fell 4.2%, reaching the lowest level since 2002.
Euro zone troubles continue
On Wednesday, Moody's downgraded Greece to Caa1 from B1, with a negative outlook. It also said Greece was running out of options. The euro zone received some relief on Friday, when the EU, ECB and IMF announced that they will provide funding for Greece in early July.
Weak data from China
Weak economic data from China helped dragged down markets this week. May PMI was announced to be 52, which was 0.9 lower than April, and the lowest level since September. It confirmed that the Chinese economy is slowing.
Looking ahead to next week
Following a series of worst-than-expected economic data in the US, investors are more certain of a slowing US economy. Without significant stimulus, the economic trend is unlikely to reverse. Thus, investors should expect US markets to continue falling next week. In terms of the euro zone, while Greece will receive funding in early July, other countries are still in trouble. The EU-ECB-IMF are simply using band-aid solutions for Greece, which does not solve the problem and only delays the day when Greece will have to default.
No comments:
Post a Comment