Article / 03 August 2016 at 5:03 GMT

3 Numbers: Modest US jobs growth expected via ADP's report

editor/analyst /
United States
  • Survey data implies softer retail spending in the Eurozone for June
  • Modest US job growth expected in today’s ADP Employment Report for July
  • US ISM Non-Manufacturing Index on track to dip but shows solid growth 

By James Picerno

Wednesday’s another busy day for economic news, including the hard-data update on Eurozone retail sales for June. Later, two US reports will provide early clues on the macro profile for July: the ADP Employment Report and the ISM Non-Manufacturing Index.

Slow build ... today's US ADP Employment Report is expected to show
another modest increase. Photo: iStock

Eurozone: Retail Sales (0900 GMT) Economic growth in the euro area slowed in the second quarter to 0.3% – half the rate posted in Q1. The good news is that the macro trend isn’t expected to weaken further in Q3.

Eurozone GDP growth is on track to hold at 0.3%, according to Euro-Coin Indicator’s July estimate. Ditto for’s current Q3 outlook.

Will today’s retail sales report fall in line with those projections? Survey data paints a mixed profile. Markit’s Eurozone Retail PMI report for June found that sales in Italy tumbled as spending increased in Germany and France. The net effect: the Retail PMI for countries that use the euro fell below the neutral 50 mark in June – the third time in the past four months that the index signalled contraction.

The soft PMI numbers imply that today’s hard data on retail sales will remain subdued. Indeed, the year-on-year trend for spending has been decelerating for much of the past year and the survey figures leave little room for expecting improvement today. The outlook for a 0.3% GDP increase in Q3 will probably hold, but for now that’s as good as it gets.

US: ADP Employment Report (1215 GMT) The official government estimates of private payrolls have been all over the map lately. ADP’s data, by contrast, has been relatively stable. Will a steady growth rate continue in today’s ADP estimate for July’s labour market?

Yes, according to consensus forecast via Although the crowd’s looking for a modestly lower increase in private payrolls – 165,000 for July vs. June’s 172,000 advance – that’s still close to the monthly increases posted recently.

The government’s figures, on the other hand, have been on a roller coaster ride. The modest 149,000 April increase evaporated in May, slipping into slightly negative territory, followed by a dramatic rebound in June.

What’s in store for July? Another modest increase via the ADP data, according to economists. But as recent history suggests, there’s no reason to think that the government update on Friday will come anywhere near the ADP estimate.

US: ISM Non-Manufacturing Index (1400 GMT) The two primary indexes for measuring economic activity in the services sector are telling wildly different stories.

Markit’s Services PMI has been raising warning flags for months, including the flash reading for July. The index slipped to 50.9 last month, just barely above the neutral 50 mark that separates growth from contraction – a five-month low. “The US service sector remained stuck in a low gear at the start of the third quarter of 2016, with growth of activity remaining subdued amid a slower rise in new business, a Markit economist said last week.

The June ISM Non-Manufacturing Index, however, points to substantially stronger growth for services, albeit with a one-month lag relative to the latest PMI numbers. In any case, the ISM index popped to 56.5 at the end of the second quarter – a seven-month high.

Which dataset is right? Clarity may be coming once we see today’s scheduled updates, starting with the PMI revision at 1345 GMT. Soon after, the first look at the ISM report arrives. According to’s consensus forecast, the ISM index will dip slightly to 56.0, but that’s still a strong reading. 

Based on the projection, the services sector is considerably stronger than the PMI allows. The only question is whether today’s ISM update will match the crowd’s forecast?


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– Edited by Gayle Bryant

James Picerno is a macro analyst/editor at Follow James or post your comment below to engage with Saxo Bank's social trading platform.


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