The US has seen an encouraging streak of strong economic data recently.
Last week, the June labor market reports marked a record jump of 4.8 million jobs over the month. The result comes on the back of a 2.8 million increase over the prior month.
This has pushed the economy further along in recovering the 20.5 million jobs lost in April. With the jump in new jobs, the unemployment rate also fell again.
The rate has now dropped back down to 11.1% from highs of almost 20% at the worst of the COVID-19 crisis.
This week, the US ISM Non-Manufacturing reading also displayed strength, jumping to 57.1 in June.
The increase from the prior month’s 45.7 reading means that the services sector soared back into growth last month as lockdowns began easing around the US. It was also far stronger than the 50.1 reading analysts were looking for.
The breakdown of the data was particularly encouraging. Business activity rose to 66 from 41 previously, with new orders also rising to 61.6.
Supplier deliveries saw a strong increase too, rising to 57.5 along with the employment component which rose to 43.1 from 31.8 previously.
Markit Data Not As Strong
Yesterday also saw the release of the Markit services PMI data. While this reading wasn’t as strong as the ISM data, there was still a firm upside movement over the month. The index rose to 47.9 from 37.5 previously.
Despite still being in contractionary territory, the two data sets together have helped further lift optimism towards the US economy with investors happily bidding up equities prices.
In some cases, lockdown measures have needed to be reintroduced or extended. Texas has announced it is postponing the reopening of its economy, while California has ordered the closure of the hospitality sector across 19 counties there to help combat a fresh outbreak there.
Goldman Turning Bearish on US Economy
Investment giant Goldman Sachs has taken a dim view on the US economic outlook given the fresh restrictions and the prospect of further such measures being needed.
In a research note this week Goldman said:
“The healthy rebound in consumer-services spending seen since mid-April now appears likely to stall in July and August as authorities impose further restrictions to contain virus spread.”
USDJPY Descending Triangle
USDJPY continues to hold above the 106.01 level support for now. However, while the bearish trend line from earlier 2020 highs remains as resistance, creating a descending triangle pattern, the risk of further losses is growing.
A break below the 106.01 level will turn focus to the 105. Level next ahead of deeper support down at the 102.27 closing 2020 lows to date.