by Chris Becker
As we head into the monthly US employment stats that the whole risk complex hinges on, it bears (sic) looking at the internals for the US economy, with the non-manufacturing ISM (services) print released last night alongside data on private employment.
Bill McBride has a good round up here at his Calculated Risk blog:
The ADP employment report showed an increase of 179,000 private sector payroll jobs in July. This was above expectations of 165,000 private sector payroll jobs added.
The ISM manufacturing employment index decreased in June to 49.4%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll jobs decreased about 22,000 in July.
The ISM non-manufacturing employment index decreased in July to 52.7%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 110,000 in June.
Combined, the ISM indexes suggests employment gains of about 88,000. This suggests employment growth well below expectations.
In recent months, the average NFP print has been below 200,000, well below the 2-3 year average and sparking concern that the Fed’s interest rate rise agenda is too soon:
Taking into account last month’s anomaly, and the current forecast for 187,000 jobs created, a significant undershoot could see the USD sold off sharply against the majors, lifting the “fortunes” of the Aussie dollar.
Definitely one to watch!