US data reviewed - Nomura

Analysts at Nomura offered their review of the US data from Tuesday.

Key Quotes:

"The ISM non-manufacturing index increased 1.8pp to 58.6 in May, above expectations (Nomura: 58.0, Consensus: 57.6). The strength across subindices was broad-based and is consistent with a rebound in other business surveys during the month. Moreover, the May survey punctuates a string of solid data for May that indicates an acceleration in US economic activity. However, on the downside, the new export orders index for the non-manufacturing survey in May fell 4pp, consistent with the 2.1pp decline in the ISM manufacturing counterpart that adds additional evidence to some divergence between the US and external outlooks."

"Job openings increased 65k in April, from an upwardly revised 6633k in March (previously reported as 6550k), leaving the job openings rate unchanged at its historical high of 4.3%. The quits rate, a measure of how comfortable workers are in moving between jobs, remained unchanged at healthy 2.2%. The recent surge in job openings has been concentrated in professional and business services. Moreover, the increase in job openings, coupled with a decline in the unemployment rate in April, resulted in the vacancy-to-unemployed (V/U) ratio increasing to 1.1 (from 1.0 in March), the highest reading on record, indicating more than one job vacancy for each unemployed worker. While the V/U ratio is at a record high, we have yet to see a material acceleration in wage pressures. Note that while the May wage numbers from Friday were positive on net, the strength has not been broad-based. Supervisory financial service workers, comprising only 1.5% of employment, contributed 0.1pp to the total 0.3pp monthly increase in average hourly earnings (AHE). In addition, while total AHE increased 2.7% on a y-o-y basis in May, stripping out supervisory financial service workers, wages were only up 2.4%, below the 2016-17 average of 2.5%."