Daily Insight
Group Economics Macro & Financial Markets Research
5 May 2016
All eyes on US job market Maritza Cabezas Senior Economist Tel: +31 20 343 5618 maritza.cabezas@nl.abnamro.com
We expect April’s nonfarm payrolls to increase 195K in Friday’s job report
Preliminary job data for April somewhat mixed
We expect the pace of US job growth will moderate throughout the year…
…mainly as a result of weaker global demand and compressed profit margins
US job market to remain solid in April, but more moderate job growth ahead All eyes are on the US labour market report to be released on Friday. Despite the slowdown in US GDP growth, the US labour market continues to be one of the bright spots of the US economy. The nonfarm payrolls is one of the first reports to be released in this second quarter. We expect that nonfarm payrolls increased by 195K in April, slightly lower than consensus (200K) and unemployment remained at 5%. This is only a bit below the average of 209K jobs per month so far this year. However, we think that the pace of job growth will moderate throughout the year. Indeed, profit growth has been declining and slower global demand suggest that hiring will be somewhat less attractive than in previous years.
US ADP private employment weakened in April 000s 400 200 0 -200 -400 -600 -800 -1000 02
04
06
08
Total private payrolls
10
12
14
ADP private employment
Source: Thomson Reuters Datastream
Insights.abnamro.nl/en
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Daily Insig ght – All eye es on US job b market – 5 May 2016
Prelimin nary US job d data mixed in n April Preliminary job data arre somewhat mixed. m Jobless claims c have beeen very upbea at lately, particula arly the claims o of the week as ssociated with the t reference pperiod for the April A employm ment report. Me eanwhile the prrivate employm ment report (AD DP), released to oday, rose by 156K in April from a do ownwardly revis sed 194K the previous p monthh. This was mu uch lower than the cons sensus of 196K K. The goods-p producing employment in this report dropped d 11K, down from a downwardly revvised 5K. Manu ufacturing is one of the weakeest sectors in th he economy. We are not n expecting m major changes in hiring in the e manufacturingg sector in Frid day’s job report. The T employmen nt index in Apriil’s ISM manufa acturing surveyy improved slig ghtly compared d to the prrevious month, but remains in n contraction te erritory (49.2). F Finally, another report released d today, Howevver, April’s ISM M non-manufactturing index, shhowed an imprrovement in service industries. The e index increase ed to 55.7 from m 54.5 the prevvious month. Th he ment componen nt was quite po ositive, increasing to 53 from 50.3. On balan nce, we think employm that April’s job report w will remain stron ng, given the im mportance of se service-produce ers in hiring.
Fed opttimistic on la bour market, but cautious s on the US eeconomic outtlook The FOM MC’s April state ement points to o strong job gro owth as a sign of additional strengthening s of the US S labour marke et. Meanwhile, recent interven ntions of FOMC C members sin nce the April meeting remain cautiou us. Federal Re eserve Bank of Atlanta’s Dennnis Lockhart a non-voting memberr, mentioned th at “the econom my is throwing mixed m signals”.. He even ques stioned the reliability y of certain data a, likely US GD DP. He sugges sted that doubtss on the reliabiility of the data are legitiimate. Meanwh hile San Francisco Fed’s Pres sident Williamss, also a non-voting member, said thatt he favoured ssome caution before b jumping to conclusionss based on firstt quarter data. He wants to see more e data in the ne ext couple of mo onths, but he hhas a positive view v on employm ment. We think that weak eco onomic data are e casting doubtts on the strength of US economy y and the need d to hike rates further. f As a re esult we expectt Fed policyma akers to keep rates on hold this year..
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Daily Insig ght – Preview w: all eyes on o US job m market – 4 May 2016
Day
Da ate
Time
Country
Key Econo omic Indicators and d Events
Period
Lattest outcome
Con nsensus
Sunday Sunday
01/05//2016 01/05//2016
03:00:00 03:00:00
CN CN
PMI manufacturing m - inde x (official) PMI no on-manufacturing - index (official)
Apr Apr
50.2 53.8
50.3
Monday Monday Monday Monday
02/05//2016 02/05//2016 02/05//2016 02/05//2016
09:00:00 10:00:00 15:45:00 16:00:00
NE EC US US
PMI PMI manufacturing m - inde x Markitt - Flash PMI ISM manufacturing m - inde x
Apr Apr F Apr F Apr
53.6 51.5 50.8 51.8
Tuesday T T Tuesday T Tuesday
03/05//2016 03/05//2016 03/05//2016
03:45:00 03:45:00 10:30:00
CN CN GB
PMI manufacturing m - inde x (Caixin) PMI se ervices - index (Caixxin) PMI manufacturing m - inde x
Apr Apr Apr
49.7 52.2 51.0
49.8
We ednesday We ednesday We ednesday We ednesday We ednesday We ednesday We ednesday We ednesday
04/05//2016 04/05//2016 04/05//2016 04/05//2016 04/05//2016 04/05//2016 04/05//2016 04/05//2016
10:00:00 10:00:00 11:00:00 14:15:00 14:30:00 14:30:00 16:00:00 16:00:00
EC EC EC US US US US US
Comp posite PMI output PMI se ervices - index Retail sales - % mom ADP nat. n employment rep port - thousands Trade balance - USD bn Output per hour nonfarm business sector - % qoq ISM no on-manufacturing, index New durable d goods orde rs - % mom
Apr F Apr F Mar Apr Mar 1Q P Apr Mar F
53.0 53.2 0.2 200 -47.1 -2.2 54.5 0.8
53.0 53.2 -0.1 190 -44.6 -1.3 54.8
55.0 0
Thursday T T Thursday T Thursday T Thursday
05/05//2016 05/05//2016 05/05//2016 05/05//2016
10:30:00 13:00:00 14:30:00 20:00:00
GB CZ US MX
PMI se ervices - index Repo rate - % Initial jobless j claims - tho ousands Policyy rate - %
Apr May 5 Apr 30 May 5
53.7 0.05 257 3.75
53.5 0.05
0.05 5
Friday Friday Friday Friday Friday Friday
06/05//2016 06/05//2016 06/05//2016 06/05//2016 06/05//2016 06/05//2016
09:00:00 14:30:00 14:30:00 14:30:00 21:00:00
CH US US US US PL
gn currency reserve s - CHF mln Foreig Chang ge in employment private p employment - thousands Chang ge in employment to otal - thousands Unem mployment - % Fed Reserve R consumer credit c - USD bn Refere ence rate - %
Apr Apr Apr Apr Mar May 6
575831 195 215 5.0 17.2 1.5
ABN AM MRO
7 53.7 51.5 51.3
51.0 0
51.2
185
3.75
193 202 5.0 16.2 1.5
185 195 5.0 1.5
Sou urce: Bloomberg, Reuters, R ABN AMR RO Group Econom mics (we provide ow wn forecasts only for f selected k ey variables v and even nts)
nd out more abo out Group Eco onomics at: http ps://insights.a abnamro.nl/en n/ Fin
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