Analysts at Nomura offered a review of the key market moving US data from overnight.
Key Quotes:
ADP private employment:
“The ADP report for September came in pretty strong at +230k and implies increased upside risk for our forecast for September BLS employment report. The manufacturing employment was up only 7k, somewhat weaker after months of strong gains, but still indicates strong activity. The construction sector employment was strong, which is somewhat at odds with the recent slowdown in the residential structures construction. Services sector employment was strong overall. This appears consistent with a sharp increase in the employment index in the September ISM nonmanufacturing survey (see below). We continue to expect September nonfarm payroll employment (NFP) to increase by 180k, consistent with steady economic momentum, although more recent incoming data point to some upside risk. We expect 175k contribution from private nonfarm payroll employment with 5k contribution from the government sector.”
ISM non-manufacturing index:
“The ISM non-manufacturing index rose 3.1pp to 61.6 in September, above expectations (Nomura: 57.5, Consensus: 58.0), with all industries indicating growth. Overall, the report indicates that non-manufacturing businesses remain positive about future and current business conditions while concerns about trade uncertainties remain. The gain in headline index was driven by improvement in both business activity (+4.5pp to 65.2) and new orders (+1.2pp to 61.6) indices. The new export orders and imports indices remained elevated despite the recent escalation in USChina trade tensions. Supplier constraints persisted, coupled with continued strong demand. The supplier deliveries index increased 1.0pp to 57.0, and the backlog of orders index rose 2.0pp to 58.8. Importantly, the employment index jumped sharply by 5.7pp to 62.4, which is the highest reading ever recorded. This reading points to strong hiring activity as well as further upside risk to BLS employment report for September.”
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