The UK construction PMI index strengthened to an 8-month high of 59.1 for February from 56.3 the previous month and above consensus forecasts of 57.3. There was strong growth in the residential sector while new orders increased at a faster rate on the month. There was, however, a significant dip in confidence with notable concerns over the impact of inflation and cost pressures, even though the rate of prices increases retreated to an 11-month low. The data failed to underpin Sterling with global risk trends dominating. The FTSE 100 index was subjected to further sustained selling which undermined the Pound and the UK currency dipped to lows against the dollar as the wider slide in global risk appetite had an important impact in sapping overall currency support. There will be further unease over the impact of a surge in energy prices on the economy. Risk Appetite dipped sharply again in Asia on Monday.
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The Euro remained under pressure ahead of Friday’s New York open with further concerns over the impact of the Ukraine crisis and damage to the Euro-zone economy. The single currency continued to test support areas and dipped below this level which triggered a round of stop-loss selling. CFTC data recorded a further increase in long speculative Euro positions to near 65,000 contracts from close to 60,000 the previous week which indicated that funds had been caught out by buying the single currency, increasing the risk of further selling unless there is a recovery in risk conditions.
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7.00 German Retail Sales (YoY) (Jan) Act. 10.3% Exp. 9.5% Prev. 0.8%
US non-farm payrolls increased 678,000 for February after a revised 481,000 January increase and well above consensus forecasts of 400,000. Manufacturing jobs increased 36,000 on the month with a 60,000 increase for construction. There were solid increases in most categories with a 179,000 gain for the leisure sector. The unemployment rate declined to 3.8% for the month from 4.0% and below expectations of 3.9% and the household survey recorded an increase of close to 550,000 in the number of employed while the participation rate edged higher. Average hourly earnings were unchanged on the month, well below expectations of a 0.5% increase, with the annual increase slowing to 5.1% from 5.5%. The data reinforced expectations that the Federal Reserve would push ahead with rate hikes and provided fresh impetus for the US dollar which strengthened to 21-month highs.
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