The equity markets continued to grind higher while oil and gasoline rallied and the Euro and Pound rebounded from very depressed levels. The S&P 500 index finished up .5 points to 1119. The trading day provided a plethora of economic releases from around the globe. The Russell 2000 Index of small caps stocks made a 52 week high.
In the US, Private-sector jobs in the U.S. fell 20,000 in February, according to a national employment report published Wednesday by payroll giant Automatic Data Processing Inc. The ADP loss is below the 50,000 drop projected by economists. The estimated change of employment for January 2010 was revised down, from a decline of 22,000 to a decline of 60,000. The February employment decline was the smallest since employment began falling in February 2008. ADP said the adverse weather had only a very small effect on the ADP Report due to the methodology used to construct it. The ADP survey tallies only private-sector jobs, while the Bureau of Labor Statistics’ nonfarm payroll data, to be released Friday, include government workers.
In its latest beige book report, the Fed said nine out of its 12 regional districts reported that economic activity improved, but in most cases the increases were modest, with activity held back by the Feb. 4-7 and Feb. 9-11 snowstorms. The beige book is a summary of economic activity prepared for use at the U.S. central bank’s next policy-setting meeting, March 16. The latest report, prepared by the Federal Reserve Bank of Kansas City, examined economic conditions across the Fed’s districts based on information collected on or before Feb. 22. “Richmond reported that economic activity slackened or remained soft across most sectors, due importantly to especially severe February weather in that region,” the report said. February’s severe winter weather is expected to have hurt several sectors of the economy. Analysts believe data Friday will show the U.S. economy continued to shed jobs as unusually violent snow storms walloped the East Coast last month. February retail sales are also expected to have been hit by the storms. Consumer spending, a key growth engine for the U.S. economy, improved slightly in many districts since the last Fed beige book was released Jan. 13. But it was hampered in several regions by the severe weather of early February, the latest survey showed. “Manufacturing activity strengthened in most regions, particularly in the high-tech equipment, automobile, and metal industries,” the report showed.
In Europe, Retail sales in the 16 countries that use the euro fell in January, indicating that the currency area’s economy is unlikely to grow much more strongly at the start of 2010 than it did at the end of 2009. Sales volume in the euro zone fell by 0.3% from December and was 1.3% lower than in January 2009, the European Union’s statistics agency, Eurostat, said Wednesday. The decline in sales was smaller than expected, with economists surveyed by Dow Jones Newswires last week having estimated that sales declined by 0.5% on the month. In the UK, February service sector PMI reported by CIPS services survey rose to 58.4 from 54.5 and vs. an expected 55.0. That is the highest level since Jan07.
The Australian Q409 GDP data out overnight justified the RBA’s rate increase. Q409 GDP was reported up 0.9% q/q, adding on to revised (upwardly) 0.3% quarterly increase previously and for a yearly rate accelerating to a better than expected +2.7% from +0.9%. This year, the economy is expected to grow by 3%. The AUD has finally broken through our 0.9030/70 target and our medium-term bullish outlook is intact: higher commodity prices, higher rates in an improving growth environment are all prove supportive.