(eToro Blog) The U.S. Labor Department earlier today released its private sector payroll report for May. According to the press release, only 54,000 new private sector jobs were created last month, down from April's downwardly revised 232,000. The findings of a consensus of Reuters' economists had earlier predicted that as many as 190,000 new jobs would be created over the period. Analyst from eToro, Leo Alkalay, was more pessimistic about job creation, forecasting 90,000 new jobs.

Earlier in the week, markets were disappointed by the ADP's labor report of only 38,000 new jobs, well off the consensus figures.The U.S. Labor Department also reported that the unemployment rate edged higher to 9.1% from last month's 9.0%; analysts' had predicted the rate would fall to 8.9%.

Earlier in the week, the markets were rocked as investors received the first new economic data for the month of May. PMI's globally were worse than expected, leading off with the Chinese PMI, and then moving into the UK, EMU and US numbers.

The US ISM manufacturing purchasing managers' index fell to 53.5 in May from 60.4 in April. Economists surveyed had expected the May PMI to slip to only 57.0. The ISM sub-indexes were mixed. The ISM's new orders index plunged to 51.0 last month from 61.7 in April, while the production index dropped to 54.0 from 63.8. The inventory index dropped to 48.7 in May from 53.6 in April. Price pressures eased. The prices index fell to 76.5 from 85.5 in April. The factory employment index declined to 58.2 from 62.7.

As reported yesterday, non-farm business productivity, which reflects the productivity of U.S. workers, rose at a 1.8% annual rate in January through March, after increasing by 2.9% in the final three months of 2010, according to the Labor Department. The reading was in line with economists' estimates.

The slowdown in productivity came as the U.S. economy stumbled in the first quarter, growing at a 1.8% annual rate in the first quarter, down from the 3.1% growth level seen at the end of 2010. Consumers spent less amid higher prices for gasoline and groceries and the manufacturing sector was hit by supply disruptions following Japan's earthquake.

Productivity in manufacturing, a sector that's been driving the recovery but suffered a setback in May, rose 4.2% in the first quarter, compared to an earlier estimate of a 6.3% increase. Factory productivity had increased 4.9% in the fourth quarter.

The worst performers over the past few trading sessions has been the banking sector as Goldman Sachs was issued a subpoena from the Manhattan district attorney. The S&P 500 Index earlier edged through the 100-day moving average which has been solid support for the market during 2011. Support is now seen near the 1295 level. A break would target support at 1260. Resistance on the benchmark index is near 1317 (100-day moving average) and then again at 1345.

In currency trading, the already under pressure U.S. Dollar slipped lower against the Euro, Aussie and Japanese Yen. Sentiment on the eToro trading floor was varied; among eToro traders of EUR/USD, recently at 1.4481, sentiment is evenly split between buyers and sellers at 4 each. Trading floor sentiment for the USD/JPY pair, recently at 80.5850 is bullish in favor of buying by a ratio of 6 to 3. Sentiment among traders of AUD/USD, recently at 1.0634, sentiment is 5 to 4 in favor of buying.

Among the DJIA traders, which is selling at 12,100, sentiment was 9 to 2 in favor of buying; sentiment among traders of the S&P 500 was also in favor of buying by 8 to 3. For NASDAQ traders, selling at 2298, sentiment is in favor of buying by 9 to 2.

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