3 numbers to watch: German unemployment, US ADP Employment & GDP

We certainly crank of the volume and significance of the economic reports today with several high profile releases. Among them we have German Unemployment Change, US ADP Employment and US GDP. There is plenty more to keep an eye out for, however, so load up on coffee, find a comfortable chair and prepare for a two-day avalanche of data*.

• May German Unemployment Change (07:55 GMT) to improve after weak April? A surprise increase in unemployment in April of 19,000 (-10,000 expected) did not materialise into a higher Unemployment Rate, since March was also revised 0.1pp higher to 6.8%. However, the flagship economy of the Eurozone continues to put robust numbers out in the face of quite some adversity and the expectation is for a labour market comeback in May. Even Germany, however, cannot avoid being hit by the commotion in Southern Europe and a general slowdown in international trade, and we look for GDP growth of less than 1% this year from 3% in 2011. Looking immediately ahead, consensus expects a change in unemployment of -10,000 with the Unemployment Rate unchanged (again) at the record low level.

• US May ADP Employment Change (12:15) to bounce back: The payroll processing company, ADP, will release its May private sector payroll estimate today, just a single day ahead of tomorrow's US Employment report. The recent string of worse-than- expected numbers in various employment statistics have, we believe, been partly due to seasonality (undershooting, after overshooting during the warm winter months) and partly due to a broadbased slowdown in the economy. Today's ADP number, which should be compared with tomorrow's private payrolls number not Nonfarm Payrolls, is expected by The Street to show a moderate increase of 150,000. While this will be above April's rather weak 119,000 print, it is still below the first three months of the year, which averaged 204,000. With the public sector still downsizing an ADP figure of 150,000 would imply a lower Nonfarm Payroll number tomorrow (more on that in our upcoming Nonfarm Payrolls preview).

• US 1Q'12 Gross Domestic Product (12:30) to be revised down: Normally we would reserve the 12:30 slot on Thursday for Initial Jobless Claims, which is invariably more timely, but we will make an exception today and look at the "age old data" that is the first revision of first quarter US GDP. The world's largest economy continues to muddle through, which we denote as growth around or somewhat below 2% (2% being our forecast for GDP this year), and the consensus is for the revised GDP report to confirm this. The median forecast is for a 0.3pp decrease in the growth rate to 1.9% q/q annualised, from 2.2%, due in part to weaker foreign trade than originally estimated. The quarterly trade deficit is now estimated at USD 149.8 billion (nominal) compared with 155.4 billion initially. Inventories have also developed at a weaker pace than previously thought, while the contribution from private consumption is expected to stay unchanged with quarterly growth of 2.9%.

* Also do not miss out on Eurozone CPI Flash Estimate (09:00 GMT), US Initial Jobless Claims (12:30) and US Chicago PMI (13:45). Chicago PMI is a regional Fed survey ahead of Friday's ISM Manufacturing report.

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