Steen Jakobsen
The Bank of Japan has abandoned quantitative easing and the European Central Bank may taper its bond-buying programme, so what is the role of central banks in 2017, asks Saxo Bank’s chief economist Steen Jakobsen.
Article / 31 August 2016 at 5:00 GMT

3 Numbers: Softer US job growth expected via ADP's estimate

editor/analyst /
United States
  • Germany’s unemployment rate projected to remain unchanged at a modest 6.1%
  • Is Eurozone's consumer inflation headed for a weaker-than-expected print today?
  • ADP’s estimate of US private-sector employment on track to edge lower in August

By James Picerno

A busy calendar of economic releases awaits for Wednesday, including Germany’s unemployment report for August, followed by this month’s flash estimate for Eurozone consumer price inflation. Later, all eyes will turn to ADP’s data for US private-sector employment for August, which will be widely read for a perspective on the government's official payrolls report due on Friday.

Slightly soft ... expectations are for US private-sector payrolls to edge lower in August
in today’s ADP report. Photo: iStock

Germany: Unemployment Report (0755 GMT) Business confidence in Germany fell the most in more than four years this month, according to last week’s update of the Ifo Business Climate Index.

“Both the current business situation and the expectations for the next six months were assessed more poorly by the companies than in the previous month,” said the group’s president. “The German economy has fallen into a summer slump.”

Some analysts wonder if the UK Brexit vote in June is the source of renewed worry for Europe’s largest economy. In particular, are Germany's companies beginning to fear that exports to the UK will suffer now that Britain has voted to leave the European Union?

It’s too early to say, although a rise in Germany’s population of newly unemployed workers wouldn’t help sentiment. But today’s monthly update on unemployment isn’t expected to provide much if any support for anticipating trade-related trouble for Germany.’s consensus forecast sees the official jobless rate for August holding steady at 6.1%, which is the lowest level for the data set’s history, which starts in 1992. Meanwhile, the number of newly unemployed workers continued to fall in July, posting the 10th straight monthly decline.

Brexit is still a risk factor for Germany and the Eurozone, but the crowd doesn’t expect a smoking gun in today’s unemployment data.

Eurozone: Consumer Price Index (0900 GMT) Inflationary pressure in Germany was a bit weaker than expected in August, according to the initial estimate from the government. Harmonised Consumer prices increased 0.3% for the year through August, down slightly from the 0.4% year-on-year gain through July.

A weaker trend suggests that today’s Eurozone inflation data could be softer than expected too. A Reuters poll of economists sees the annual pace of headline consumer inflation ticking higher to 0.3% through August, which would match January’s gain as the fastest pace so far this year. But the weaker figures for Germany raise new doubts about today’s report.

“Now we clearly see downside risks to this forecast,” a DZ bank economist told Reuters yesterday. “We'll probably have stable inflation of 0.2% in the Eurozone. And this would clearly raise the pressure on the [European Central Bank] to unleash more monetary stimulus.”

Adding to the downside risk for the Eurozone economic outlook is the latest sentiment data for the 19 countries that share the euro. The European Commission’s Economic Sentiment Indicator for this month slipped to its lowest level since March.

The news follows last Friday’s estimate for third-quarter GDP via, which projects growth dipping to a quarterly rise of just 0.21%, which would mark the weakest gain in two years. (For additional context of Europe’s macro trend, keep an eye on today’s update for Eurozone GDP via the Bank of Italy’s Euro-Coin Indicator, scheduled for 0730 GMT.)

Meanwhile, sentiment will probably take another hit if today’s inflation data falls below the crowd’s expectations for a 0.3% year-on-year gain.

US: ADP Employment Report (1215 GMT) Economic reports for the US so far this week continue to paint a robust picture for the macro trend. Monday’s July numbers for personal income and spending suggest that consumption growth is still on track for a solid third quarter. Yesterday’s update of the Conference Board’s Consumer Confidence Index for August looks encouraging too.

“Consumer confidence improved in August to its highest level in nearly a year, after a marginal decline in July,” said CB’s director of economic indicators. “Consumers’ assessment of both current business and labour market conditions was considerably more favourable than last month.”

The main event for this week, of course, is Friday’s August release for payrolls. Economists are looking for a softer but still healthy rate of growth, based on’s consensus forecast.

Today’s ADP estimate for the nation’s private payrolls in August is expected to fall in line with the forecast. The crowd’s looking for a slightly softer gain for US private-sector payrolls in August in today’s ADP report: up 175,000 vs up 179,000 in July. That’s still a respectable gain that implies that economic growth will roll on for the near term. But the estimate also suggests that the strong advances in payrolls in June and July by the government’s reckoning is due to fade.

Meanwhile, Bloomberg noted that “US August nonfarm payrolls have fallen short of estimates in each of the past five years.” Today’s ADP numbers aren’t expected to offer a strong reason to think otherwise.

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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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