Employment falling despite people leaving the workforce
Employment fell 4.8k in May, the first decline in five months.
It was weaker than expectations, but some softer job growth was on the cards after the strong gains earlier in the year.
The unemployment rate was steady at 5.8% in May and below the 6.0% recorded in February. However, the unemployment rate was kept down by a fall in the participation rate to a four-month low.
A clear trend of increasing full-time work has emerged this year, likely signalling that employers are becoming more confident about the outlook.
A total of 101.3k full-time jobs have been created so far in 2014. In contrast, part-time jobs declined by 3.3k.
The labour market is still in much better shape than late last year and we expect it to remain so. Despite some near-term speed bumps, an economic recovery is still underway and suggests that further moderate job growth is in prospect.
Risk aversion took hold last night as violence escalated in Iraq and US President Obama failed to rule out military action.
US economic data also missed expectations which also may have added to investor nervousness.
The Dow and S&P500 weakened 0.7%, and the Nasdaq fell 0.8%.
US treasuries strengthened (yields rose) as economic data disappointed and heightened geopolitical tensions boosted demand for safe haven bonds.
Yields on 10-year US notes fell 4 basis points.
Australian yields on 3 and 10-year bonds (implied by futures) fell to 2.84% and 3.79% respectively.
The US dollar fell against a basket of currencies as economic data was weaker than expected.
The euro and pound were respectively supported by solid euro zone data and ahead of speech by Bank of England Governor Carney tonight.
The Australian dollar went against the risk aversion and edged higher overnight. Resilience in the AUD has reasserted itself despite weaker commodity prices and recent mixed domestic economic data.
Oil was the big mover overnight on concerns the violence could disrupt supplies from Iraq. US crude oil prices rose to a 9-month high.
Gold prices also gained on the geopolitical tensions. Copper prices weakened over a probe into trade financing in China.
Eurozone industrial production rose 0.8% in April, the largest gain in five months. Germany, France, Italy and Spain all posted gains in the month.
The annual growth rate picked up to 1.4% in April from 0.2% previously.
Machine orders fell 9.1% in April, but it followed a 19.1% surge in the previous month and was better than market expectations for a 10.8% decline.
The annual rate of growth was a solid 17.6%, suggesting that the underlying trend continues to point to a pickup in business spending.
UK house prices rose in May according to a net balance of 57% of RICS members, just below the March peak of 58%.
Retail sales rose 0.3% in May, below consensus estimates for a 0.6% gain. However, April's result was revised upwards from 0.1% to 0.5%.
For May, auto sales rose 1.4% to be up about 9% since January. Core retailing, which excludes auto and gas, was flat in May, but April was also revised upwards from -0.1% to 0.3%.
Overall, it was a mixed result but shouldn't dispel the notion that the US economy is picking up in Q2.
US initial jobless claims rose 4k to 317k in the week ending 7 June. Claims have lifted for two consecutive weeks, and saw the 4-week moving average lift although it remains close to multi-year lows.