05 June 2023
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US nonfarm payrolls rise by 339K in May

By Edward Bell

Data from the US employment report painted a mixed picture for May. The enterprise survey showed nonfarm payrolls rising by 339K on the month, from an upwardly revised 294K in April. Consensus expectations had been for a gain of 195K. There were broad-based gains in payrolls, with particular strength in professional and business services, together with government and healthcare. In contrast a slightly more downbeat picture emerged from the household survey, which suggested that the unemployment rate rose to 3.7% in May from 3.4% the month prior. The rise in the unemployment rate was in large part driven by an increase in prime-age workers entering the labour force. There was also a marginal moderation in the growth of average hourly earnings which rose 0.3% on the month, from 0.4% m/m in April. On an annual basis that left earning 4.3% higher, matching the smallest rise since mid-2021. It is worth noting that the enterprise survey is larger, and therefore tends to be associated with a smaller margin of error. 

French Industrial Production rose by more than expected in April, increasing 0.8% m/m and 1.3% y/y. With the exception of food, most sub-sectors saw an uptick in output. There was also strong rebound in coking and refining with output having been constrained the month prior as a result of strike action.

Data from the Dubai Department of Economy and Tourism showed that the Emirate attracted over 6m international visitors in the first 4 months of 2023, an 18% increase on the same period last year. The largest source markets between January and April 2023 were India, Russia, the United Kingdom and Saudi Arabia.


Today’s Economic Data and Events


  • 09:00 India indutrial production, May
  • 11:00 Turkey CPI, May. Forecast: 39% y/y
  • 18:00 US factory orders, April. Forecast: 0.8% m/m
  • 18:00 US ISM services index, May. Forecast: 52.5


Fixed Income

  • US Treasuries plunged at the end of the week as another hot jobs report raised expectations that the Fed will indeed need to hike again at one of their upcoming meetings. Yields on the 2yr UST closed the day up by about 16bps at 4.4969% while the 10yr yield added almost 10bps to settle at 3.6907%. Market pricing for a move in June settled the week at around 30% probability with an 80% chance that between now and the end of July rates will have moved up by 25bps. The fly in the ointment for further hawkish moves was a slowdown in wage growth and a rise in the unemployment rate to 3.7% from 3.4% previously.
  • European bonds also closed generally weaker at the end of the week with bund yields up 7bps at 2.31% and gilt yields rising by 4bps to 4.147%.
  • Turkish 10yr bonds rallied at the end of the week in anticipation of and with the confirmation that Mehmet Simsek will serve as finance minister in the newest administration of president Recep Tayyip Erdogan.


  • The dollar pulled higher on Friday against most peers as another strong labour market print supported the idea that the Fed would indeed need to move again over the summer. EURUSD fell by 0.5% to 1.0708 at the end of the week while GBPUSD dropped 0.6% to 1.2453. USDJPY jumped by 0.8% to 139.92.
  • Commodity currencies closed more mixed with USDCAD moving in favour of the loonie, down 0.2% at 1.3425, along with a substantial gain in AUDUSD—up by 0.6% at 0.661. NZDUSD closed near flat at 0.6067.


  • After a strong close on Friday, most major global equity indices closed the week positively, with France’s CAC a notable exception as it ended down 0.7% w/w. Elsewhere in Europe the composite STOXX 600 ended up 0.2% w/w while the DAX gained 0.5% and the FTSE 100 0.6%.
  • Other regions were somewhat stronger, as in the US the NASDAQ gained 4.3% w/w, the S&P 500 3.0%, and the Dow Jones 3.1%.
  • Locally, the DFM added 1.8% w/w but the ADX ended the week 0.5% lower. In Turkey, the Borsa Istanbul gained 11.7% w/w with a 3.1% gain on Friday.


  • Oil prices ended last week on a stronger footing as the market began to coalesce around the idea that OPEC+ would endorse another production cut at their first ministerial meeting of the year. Brent futures added 2.5% to USD 76.13/b while WTI gained 2.3% to close at USD 71.74/b. However, both benchmarks were down slightly on the week as a whole.
  • OPEC+ agreed to extend their production targets until the end of 2024 although the targets now imply substantial revision to baseline capacity levels. Members of OPEC+ that announced additional voluntary cuts in April this year will extend those additional cuts until the end of 2024 while Saudi Arabia will provide an another cut of 1m b/d to take effect for at least one month in July 2023. The production targets for 2024 show a substantial revision to production baseline levels and all members of the producers’ alliance will agree to a new assessment of their production capacities by mid-way through 2024. The revision to baselines was likely a necessity for OPEC+ to present a decision with a unified voice as several countries who have made heavy investment into upstream projects—like the UAE—had been forced to idle much of their overall capacity. Because of the extension of the voluntary cuts, overall OPEC+ production targets are due to be lower in 2024 from 2023 levels as the producers’ alliance wants to maintain a “precautious, proactive, and pre-emptive” approach to market management. The length of the arrangement is a main takeaway of the meeting given producers’ are pledging target levels for the H2 2024 when near-term oil market fundamentals look to be in flux.

Written By

Edward Bell Head of Market Economics

Daniel Richards Senior Economist

Jeanne Walters Senior Economist

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