Economic news released out of the United States today showed that the contraction in spring economic activity was less than previously reported, potentially signaling that the economy’s deep recession may be subsiding, while an important employment report fell by more than expected.
The U.S. Commerce Department’s Real Gross Domestic Product report showed economy’s annual pace of contraction in the second quarter of 2009 slowed as the annualized GDP contracted by 0.7 percent in the April to June 2009 quarter from the second quarter level of 2008. This contraction was updated from previous estimates of a 1.0 percent GDP contraction. Economic forecasts were expecting the GDP decline to grow to approximately 1.2 percent for the quarter. The second quarter GDP is a significant improvement from the revised real 6.4 percent contraction in the first quarter of 2009.
Contributing to the second quarter GDP fall was a decrease in consumer spending, exports and nonresidential fixed investments. Exports of goods and services decreased by 4.1 percent after falling by 29.9 percent in the first quarter. Imports fell by 14.7 percent following a 36.4 percent decline in the first quarter. Consumer spending, which makes up approximately two-thirds of U.S. economic activity, decreased in the second quarter by 0.9 percent after increasing in the first quarter by 0.6 percent.
ADP Employment falls more than expected.
U.S. employment data, released today in the form of the ADP National Employment Report, showed that U.S. private employment declined by more than expected in September. The nonfarm private employment decreased by 254,000 workers in September following the revised August decline of 277,000 jobs. August’s data was revised downwards from the original release of 298,000 jobs lost. September’s data was worse than the decline of roughly 200,000 jobs that market forecasts were expecting but September also marked the smallest monthly job decline since July 2008.
The goods-providing sector showed the largest decline for the month with a loss of 151,000 jobs while the service-producing sector had a decline of 103,000 jobs. The manufacturing sector had a loss of 74,000 jobs while construction jobs fell for the 32nd straight month with a decline of 73,000 workers. All size of businesses continued to cut jobs in August as large businesses lost 61,000 jobs, medium sized businesses shed 93,000 jobs and small businesses dropped 100,000 jobs.
US Dollar mixed in Trading.
The U.S. Dollar has been mixed in forex trading today against most of the major currencies. The dollar has gained some ground against the British pound and Swiss franc (on speculated SNB intervention) while losing ground to the euro, Australian dollar, Canadian dollar, Japanese yen and New Zealand dollar in the US trading session at 1:47pm EDT according to according currency data by Oanda.
The U.S. stock markets have been fluctuating session today and for the most part have stayed in positive territory at time of writing with the Dow advancing by approximately 5 points, the Nasdaq increasing 4 points and the S&P 500 has been almost unchanged. Oil has traded higher by $3.01 to $69.72 while gold has traded higher by $14.90 to $1008.00 per ounce.
Swiss National Bank Intervention in Fx Markets today?
Watching the price action in two major Swiss franc pairs today has shown that probable Swiss National Bank intervention action has taken place. The EUR/CHF and USD/CHF surged higher in moves reminiscent of prior SNB interventions although not quite as high. The Bank recently reiterated it’s intention to sell francs in order to fight the effects of deflation in Switzerland. The SNB has not commented today on the market action according to Reuters.
EUR/CHF Hourly Chart – The Euro flies higher versus the Swiss Franc this morning in Forex trading on possible SNB intervention.