US non-farm payrolls disappoint against expectations on Friday

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Last week started slowly following holidays in the US and the UK however, it was an optimistic start with news that Greece was prepared to accept more budget cuts in return for the next tranche of the IMF/EU bailout. The positive mood didn't last with weak economic data released on both sides of the Atlantic.

Wednesday's ADP employment figures showed that just 38,000 jobs were added in May. In the UK May manufacturing PMI fell from 54.4 to 52.1, May services PMI retreated as well, to 53.8 from 54.3, but construction PMI rose from 53.3 to 54.

The end of last week saw a surprisingly large drop in US non-farm payrolls. They were expected to grow by 175,000, but only came out at coming 54,000, down from 224,000 last month and well below markets expectations of around 150,000.

The US services PMI was more positive at 54.6, better than expected and higher on the month, but was unable to reverse the
effect the non-farms had on the US Dollar.

In practice the US Dollar had a volatile half-hour after the announcements, including a half-cent upward spike. The conjecture amongst investors must have been that they expected the payrolls number to be even worse. It rally didn't last though as the US Dollar fell more swiftly in the afternoon.

It is going to be a fairly quiet week for economic data with most attention at home focused on Thursday’s interest-rate announcement by the Bank of England - the first without staunch hawk Andrew Sentance, who left the MPC last month. Trade balance figures are also released on Thursday, before manufacturing and industrial production data closes out the week.