Daily Insight
Group Economics Macro & Financial Markets Research Maritza Cabezas & Peter de Bruin
US ADP a bit weaker than expected
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7 May 2015 • • •
US ADP employment report a bit weaker than expected, but service-providing employment strong Other US labour market indicators suggest Friday’s job report will likely improve Russia: A tale of two stories; The economy plunges but panic abates
US ADP employment report a bit weaker than expected…
ADP report a bit weaker than expected
Private sector employment increased by 169K in April from a
‘000s
slightly downward adjusted 175K the previous month. Looking at the composition of the report, manufacturing shed 10K jobs after losing 3K in March. The impact of lower oil prices on the energy related industry are weighing on manufacturing activities, while the strong dollar and port disruptions are also affecting manufacturing activities that are export related. Meanwhile, the construction industry added 23K jobs, up from 21K last month. This sector is sensitive to weather conditions,
600 400 200 0 -200 -400 -600 -800 -1000 06
suggesting that we should see further improvement in the
08
09
10
Private nonfarm payrolls
coming months. …but service-providing employment improving
07
11
12
13
14
15
ADP employment
Source: Thomson Reuters Datastream
Despite the weakness in goods-producing employment, service providing employment in the ADP report rose by 170K
Russia: A tale of two stories; The economy plunges,…
in April, almost unchanged from March’s reading. The sectors
The economic situation in Russia can best be described as a
that increased were professional business which contributed
tale of two stories. On the one hand, incoming data are
with 34K jobs in April up from March’s 28K, while trade and
suggesting that the recession is deepening. Consumption is
transportation grew by 44K up from 41K the previous month.
taking a turn for the worse as households’ real purchasing
This is in line with other reports that suggest that jobs in the
power is being eroded by higher inflation, while firms have
service sector remain solid. Indeed, April’s US ISM non-
continued to shelve their investment plans. All in all, we think
manufacturing index, released yesterday at 57.8, showed the
that the economy contracted by 3% yoy or so in the first
highest figure since November. Most of the components,
quarter.
including the employment index, increased between March and April. This is consistent with our view that payroll growth
…but panic abates
will be stronger in the second quarter.
However, on the other hand, the panic that we saw at the end of last year that forced the central bank to raise rates to 17%
Friday’s US employment data should, however, improve
has clearly abated. Indeed, since the end of January, the ruble
This report comes ahead of the nonfarm payrolls to be
has appreciated by around 28% helped by a modest rise in oil
released on Friday. As a result of ADP’s methodology, the
prices, CDS-spreads have come in by around 250bp, while the
weak April print might in part reflect the influence of the weaker
upward momentum in inflation on the back of past ruble
March non-farm payrolls report. Other labour market indicators
weakness is waning. All this allowed the central bank to bring
have improved lately. Jobless claims, for instance, have been at historical lows. Nonetheless, the ADP employment report suggests that there are some downside risks to our forecast of 225K for Friday’s report.
rates down by a cumulative 450bp so far. Looking forward, we think that the central bank will continue to sharply loosen policy, with its key rate set to hit 9% at the end of last year. A loosening of monetary policy and lower inflation should help the economy to stabilise at the end of the year, before returning to modest growth in 2016.
2
US ADP a bit weaker than expected – 1 May 2015
Day
Date
Time
Country
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Monday Monday
04/05/2015 04/05/2015
03:45:00 10:00:00
CN EC
PMI manufacturing - index (HSBC) PMI manufacturing - index
Apr F Apr F
49.2 51.9
49.4 51.9
Tuesday Tuesday Tuesday
05/05/2015 05/05/2015 05/05/2015
14:30:00 16:00:00
US US EC
Trade balance - USD bn ISM non-manufacturing, index European Comission Economic Forecasts
Mar Apr
-35.4 56.5
-40.2 56.1
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
06/05/2015 06/05/2015 06/05/2015 06/05/2015 06/05/2015 06/05/2015 06/05/2015 06/05/2015
03:45:00 10:00:00 10:00:00 10:30:00 11:00:00 14:15:00 14:30:00
CN EC EC GB EC US US PL
PMI services - index (HSBC) PMI services - index Composite PMI output PMI services - index Retail sales - % mom ADP nat. employment report - thousands Output per hour nonfarm business sector - % qoq Reference rate - %
Apr Apr F Apr F Apr Mar Apr 1Q P May 6
52.3 53.7 53.5 58.9 -0.2 188.7 -2.2 1.5
53.7 53.5 58.7 -0.3 199.3 -1.8 1.5
Thursday Thursday Thursday Thursday Thursday Thursday Thursday
07/05/2015 07/05/2015 07/05/2015 07/05/2015 07/05/2015 07/05/2015 07/05/2015
08:00:00 09:00:00 09:30:00 10:00:00 13:00:00 14:30:00 21:00:00
DE CH NL NO CZ US US
Manufacturing orders - % mom Foreign currency reserves - CHF bn CPI - % yoy Policy rate - % Repo rate - % Initial jobless claims - thousands Fed Reserve consumer credit - USD bn
Mar Apr Apr May 7 May 7 May 2 Mar
-0.9 522.40 0.4 1.25 0.1 262 15.5
1.3 526.33
Friday Friday Friday Friday Friday Friday Friday
08/05/2015 08/05/2015 08/05/2015 08/05/2015 08/05/2015 08/05/2015 08/05/2015
08:00:00 10:30:00 14:30:00 14:30:00 14:30:00
DE GB US US US CN CN
Industrial production - % mom Trade balance - GDP mln Change in employment private employment - thousands Change in employment total - thousands Unemployment - % Exports Imports
Mar Mar Apr Apr Apr Apr Apr
0.2 -2859 129 126 5.5 -15.0 -12.7
0.3 -2300 223 225.5 5.4 2.9 -9.8
ABN AMRO
-0.5
1.5 2.0 0.4
1.13 0.1
0.1
15.7 0.5 223 225 5.4
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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