Still the sheer size of the selloff has unnerved traders across Asia and is carrying over into Europe, with bourses looking to kick the session off lower ahead of the US non-farm payroll.
Expectations are for 1.4 million jobs to have been created in August, down from 1.76 million in July. The unemployment rate is also expected to slip into single digit falling to 9.8%, down from 10.2%. Average earnings growth is due to slow slightly to 4.5%, from 4.8% suggesting that more lower income earners are returning to the workforce.
The key lead indicators for the NFP report haven’t been encouraging. The employment component of the ISM manufacturing and non-manufacturing reports showed continued contraction, albeit at a slower pace. The closely correlated ADP report also fell short of expectation, suggesting a disappointing headline figure could be on the cards. However, in such unprecedented times anything is possible.
Europe’s rebound slowing
Meanwhile, the economic recovery in Europe could be showing signs of losing steam. The Spanish French and Italian service sector PMI’s revealed that activity contracted in August. Retail sales across the bloc also unexpectedly fell -1.3% month on month in July. Adding to the downbeat news German factory orders, which were expected to increase an impressive 5% month on, grew 2.8%, following from a 27% increase in June.