3 numbers to watch: Nonfarm Payrolls... and all the others

The big one awaits us once again. We are, of course, talking about US Employment, which can helpfully stage some sort of comeback after a run of weak showings. Elsewhere we have producer prices from the UK, Industrial Production from Germany and Ivey PMI and Building Permits from Canada, but today is all about the US labour market.

• Jun UK PPI Output (08:30 GMT) to weaken further: As we reiterated a couple of weeks ago inflation - both for producers and consumers - has been on a steady deceleration path this year as economic weakness (and the fading of temporary factors related to commodities) makes its mark. Consensus looks for a further deceleration in producer prices to 2.4% y/y (-0.2% m/m) in June from 2.8% (-0.2%) earlier while the less volatile Core PPI Output is seen slowing by 0.1 percentage points to 2%.

• May German Industrial Production (10:00) to rise in May after terrible April? Yesterday's better than expected May Factory Orders report points to an improvement in today's production numbers. The report yesterday showed a better than expected increase of 0.6% m/m (0% expected) and gave a boot to April's figure which was revised up by 0.5pp to -1.4%. Consensus looks for 0.2% m/m today after last month's -2.2%.

• June US Nonfarm Payrolls & Unemployment Rate (12:30): And to the mother of all economic indicators. Seasonally this report has made quite a mark this year with Jan-Feb averaging 267,000, March read 143,000 and Apr-May averaged at just 73,000. Not all of this is due to seasonal factors, of course, but they have certainly played a part. These however should have faded by now and we should be left with a report which will give a clearer picture of the US labour market than previous reports. It is undeniable that the US economy has slowed - as we have expected all along - but it seems to us that the weakness has been overstated and we remain confident in our "muddle-through" scenario for the US this year (2% GDP growth).
  Looking ahead to today's report, on the plus side we can count ISM Manufacturing and Non-manufacturing, with the Employment figures - each of which read 56.6 and 52.3, respectively. These two combined point to a Nonfarm Payrolls reading today of 151,000, not far from yesterday's ADP Employment Change of 176,000 when you adjust for the public sector (which does not impact the ADP figure). The ADP Employment report is another score for the plus side. On the other hand Initial Jobless Claims have been poor recently and in the NFP survey week it printed a weak 392,000 - the highest survey week print since October 2011. It points to a NFP print below 100,000. Consensus agrees more with the latter and projects 100,000 while the Unemployment Rate is seen unchanged at 8.2%.