US Preliminary First Quarter GDP Lowers

The United States (US) gross domestic product (GDP) annual rate increased 1.9 percent in the first quarter of 2012 from the fourth quarter of 2011, according to the "second" estimate provided by the Bureau of Economic Analysis on Thursday. The fourth quarter of 2011 experienced a GDP increase of 3.0 percent. The GDP estimate released today is based on more complete data than the previous “advance” estimate released last month at 2.2 percent. The first quarter’s gain in GDP reflected positive contributions from personal consumption expenditures (PCE), exports, residential fixed investment, private inventory investment, and nonresidential fixed investment. Additions were offset by negative contributions from government spending alongside increased imports, which serve as a subtraction to the GDP calculation. The slowing of GDP growth in the first quarter of the year resulted mainly from a deceleration in nonresidential fixed investment that was partly offset by accelerations in exports and in PCE.

US employment increased 133,000 in May from April 2012 as the estimate was revised down a modest 6,000 count, according to Automatic Data Processing (ADP) on Thursday. The service-providing sector increased 132,000 in their employment over May and the goods-producing sector increased by 1,000 positions. Of the increase, the private sector added 132,000 in May with small-sized companies (up to 49 workers) providing the majority of the increase at 67,000 additional positions. Medium-sized companies (50-499 workers) appended 57,000 jobs and large companies (500+ workers) supplied 9,000 more employees over the month.

Despite a day of negative sentiment from Europe and US, the EURUSD found support near 1.2360 as we head into Non Farm Payrolls report tomorrow. If the report is better than expected, EURUSD might bounce higher towards 1.2500. On the other hand, if the report comes below expectations, we expect the EURUSD to target 1.2260. 

Eugene Ross, Analyst

Admiral Markets

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