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2 Sep 2015
ADP directional indicator points to an uneventful Nonfarm Payrolls - ING
FXStreet (Guatemala) - Rob Carnell, analyst at ING explained that with the ADP survey the only remotely accurate US non-farm payrolls directional indicator, the latest release might suggest that there is unlikely to be any significant deviation of Friday’s payrolls from the 215K figure printed last month.
Key Quotes:
"The ADP employment total rose by 190K, up from a downward revised 177K in July (previously 185K). That said, a 13K monthly difference looks insignificant relative to the noise in this series, and a more reasonable description of the figures would be to say that there is no strong directional steer from the ADP this month.
One interpretation of this would be that the August payrolls figures will be close to the 215K result in July. But that would be to ignore the scope for occasional but sizeable divergences in these two series. A better interpretation would be that anything is still possible from Friday’s labour report figures, and scope for market surprises in both directions remains, though the probability of this coming from the payrolls figure looks smaller at this stage.
There are, however, other parts of the report that might still inject some market volatility. The household employment survey in July was quite weak (+101K), so we could be looking at some catch up in the region of +300K this month. So long as this isn’t totally swallowed up in a surge in the labour force, which was also soft in July (+69K), and with some helpful rounding, we might see more than a 0.1ppt fall in the unemployment rate, taking it down to 5.1% (consensus is for a fall from 5.3% to 5.2%).
Finally, there is the hourly wages data. We have been looking in vain for a pick up here for longer than we care to remember, and anecdotes of rising wages seem to be failing to translate into higher official numbers. But the recent Conference Board labour data gave cause for some renewed optimism on the wages front, and if this is borne out, then there is just possibly some scope for wages to send a quite confusing message against the back of a non-descript payrolls number."
Key Quotes:
"The ADP employment total rose by 190K, up from a downward revised 177K in July (previously 185K). That said, a 13K monthly difference looks insignificant relative to the noise in this series, and a more reasonable description of the figures would be to say that there is no strong directional steer from the ADP this month.
One interpretation of this would be that the August payrolls figures will be close to the 215K result in July. But that would be to ignore the scope for occasional but sizeable divergences in these two series. A better interpretation would be that anything is still possible from Friday’s labour report figures, and scope for market surprises in both directions remains, though the probability of this coming from the payrolls figure looks smaller at this stage.
There are, however, other parts of the report that might still inject some market volatility. The household employment survey in July was quite weak (+101K), so we could be looking at some catch up in the region of +300K this month. So long as this isn’t totally swallowed up in a surge in the labour force, which was also soft in July (+69K), and with some helpful rounding, we might see more than a 0.1ppt fall in the unemployment rate, taking it down to 5.1% (consensus is for a fall from 5.3% to 5.2%).
Finally, there is the hourly wages data. We have been looking in vain for a pick up here for longer than we care to remember, and anecdotes of rising wages seem to be failing to translate into higher official numbers. But the recent Conference Board labour data gave cause for some renewed optimism on the wages front, and if this is borne out, then there is just possibly some scope for wages to send a quite confusing message against the back of a non-descript payrolls number."