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2 Jul 2014
Strong US ADP employment could be misleading ahead of NFP release - ING
FXStreet (Łódź) - In the opinion of Rob Carnell from ING, today's strong increase in ADP employment of 281K in June, following the 179K rise in May, could be sending a false signal ahead of the NFP publication on Thursday.
Key quotes
"You have to go back to November 2012 to see a similar spike up in the ADP survey. However, back then, the ADP report gave a false signal for non-farm payrolls, which were virtually unchanged from the previous month (actually slightly down at 203K (revised) from 225K)."
"The payrolls series in 2012 actually saw a greater pick up the previous month, when it accelerated at about a 65K pace from the previous trend of about 160K."
"We are forecasting a payrolls figure of 220K, slightly above consensus, and we are heartened to be that side of the forecasting pack by these figures."
"Moreover, we are also slightly more optimistic than consensus in looking for a further 0.1pp decline in the unemployment rate, which is more likely if this ADP result is matched by the household survey and labour force participation does not surge."
"As ever, wages will remain a key focus of this report. Any hint that wages are beginning to pick up could seriously change the market’s perceptions about inflation risk and Fed policy."
"Without this, even a strong payrolls will likely have little impact on the pace of the Fed’s tapering schedule, and market reaction could be relatively modest even for a 250K+ payrolls number."
Key quotes
"You have to go back to November 2012 to see a similar spike up in the ADP survey. However, back then, the ADP report gave a false signal for non-farm payrolls, which were virtually unchanged from the previous month (actually slightly down at 203K (revised) from 225K)."
"The payrolls series in 2012 actually saw a greater pick up the previous month, when it accelerated at about a 65K pace from the previous trend of about 160K."
"We are forecasting a payrolls figure of 220K, slightly above consensus, and we are heartened to be that side of the forecasting pack by these figures."
"Moreover, we are also slightly more optimistic than consensus in looking for a further 0.1pp decline in the unemployment rate, which is more likely if this ADP result is matched by the household survey and labour force participation does not surge."
"As ever, wages will remain a key focus of this report. Any hint that wages are beginning to pick up could seriously change the market’s perceptions about inflation risk and Fed policy."
"Without this, even a strong payrolls will likely have little impact on the pace of the Fed’s tapering schedule, and market reaction could be relatively modest even for a 250K+ payrolls number."