Daily Insight
Group Economics Macro & Financial Markets Research
3 March 2016
Stronger than expected US ADP job report Maritza Cabezas Senior Economist Tel: +31 20 343 5618 maritza.cabezas@nl.abnamro.com
US ADP employment adds 214K jobs in February
Nonfarm payrolls on Friday to show some improvement compared to January
Slower economic activity and weaker profits in the US will likely result in more moderate employment growth, but no recession
ADP employment adds 214K jobs in February The ADP employment report for February showed that private payroll growth increased 214K on the month, above consensus estimates (190K) and slightly higher than the revised January figure of 193K. Construction continues to show some improvement, with 27K additional jobs added, while manufacturing firms shed 9K jobs. The decline in manufacturing is a disappointment since in January’s employment report, the manufacturing sector saw some hiring. The service providing sector continues to show strong hiring despite the weak nonmanufacturing surveys reported in the beginning of this year. The expansion in jobs was driven by professional business services. The ADP report is generally an appetizer for Friday’s nonfarm payrolls report.
ADP an appetizer for nonfarm payrolls report ‘000s
600 400 200 0 -200 -400 -600 -800 -1000 01
02
04
05
07
08
Nonfarm payrolls Source: Thomson Reuters Datastream
Insights.abnamro.nl/en
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11 ADP
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Daily Insight – ADP stronger than expected US job report- 3 March 2016
Nonfarm payrolls on Friday to show some improvement compared to January The ADP report suggests there could be a firming of nonfarm payroll growth on Friday. We look for an increase of 165K in the private nonfarm payrolls and unemployment remaining at 4.9%. This is an increase compared to the 158K reported in January, but it is below consensus. Slower economic activity will likely result in more moderate employment growth Indeed, we expect job gains to slow down a bit throughout the year compared to 2015. We expect firms to start economising on labour as the job market continues to tighten. The combination of subdued productivity gains and rising wage growth will likely squeeze profit margins. These are still at high levels though, suggesting that there is room for some compression without having a large impact on employment growth. However, slower labour growth would not point to a recession A slower job labour growth scenario does not point to a recession in the coming year. Indeed, almost all labour market indicators are far from levels that have been reported before recessions. In fact, in the past nonfarm payrolls at similar levels than today’s have enforced economic expansions.
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Daily Insight – ADP stronger than expected US job report- 3 March 2016
Day
Date
Time
Country
Monday Monday Monday Monday Monday
29/02/2016 29/02/2016 29/02/2016 29/02/2016 29/02/2016
00:50:00 11:00:00 15:00:00 15:45:00 16:00:00
JP EC BE US US
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016 01/03/2016
00:30:00 02:00:00 02:00:00 02:45:00 09:00:00 09:55:00 09:55:00 10:00:00 10:30:00 11:00:00 15:45:00 16:00:00
Wednesday Wednesday
02/03/2016 02/03/2016
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
ABN AMRO
Industrial production - % mom CPI - % yoy GDP - % qoq Chicago Fed - business confidence - index Pending home sales - % mom
Jan P Feb 4Q F Feb Jan
3.7 -0.2 0.3 47.6 -2.5
2.8 0.2
-0.2
52.3 0.9
52.0 0.8
JP CN CN CN NE DE DE EC GB EC US US
Unemployment - % PMI manufacturing - index (official) PMI non-manufacturing - index (official) PMI manufacturing - index (Caixin) PMI Unemployment - % Unemployment change - thousands PMI manufacturing - index PMI manufacturing - index Unemployment - % Markit - Flash PMI ISM manufacturing - index
Jan Feb Feb Feb Feb Feb Feb Feb F Feb Jan Feb F Feb
3.2 49.0 52.7 48.0 51.7 6.20 -10.0 51.2 50.8 10.3 51.3 50
14:15:00
US BR
ADP nat. employment report - thousands Policy rate - %
Feb Mar 2
214.0 14.3
03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016 03/03/2016
02:45:00 02:45:00 10:00:00 10:00:00 10:30:00 11:00:00 13:00:00 14:30:00 16:00:00
CN CN FR EC EC GB EC BR US US
PMI services - index (Caixin) PMI composite - index (Caixin) Unemployment (mainland France) - % PMI services - index Composite PMI output PMI services - index Retail sales - % mom GDP - % yoy Output per hour nonfarm business sector - % qoq ISM non-manufacturing, index
Feb Feb 4Q Feb F Feb F Feb Jan 4Q 4Q F Feb
04/03/2016 04/03/2016 04/03/2016 04/03/2016
14:30:00 14:30:00 14:30:00 14:30:00
US US US US
Change in employment private employment - thousands Change in employment total - thousands Unemployment - % Trade balance - USD bn
Feb Feb Feb Jan
3.3 49.4 48.4 6.20 -8.3 51.0 52.0 10.4
51 10.4
49
49
186.4
165
52.4 50.1 10.2 53.0 52.7 55.6 0.3 -4.5 -3.0 53.5
53.0 52.7 55.1 0.1
54.0 0.1
-3.3 53.4
52.0
158.0 151.0 4.9 -43.4
188.0 198.0 4.9 -43.4
165 175 4.9
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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