TV

Michael Jarman
Intraday volatility on the S&P 500 "requires caution", according to Michael Jarman from H20 Markets in London. He gives his views on Burberry and looks ahead to key levels over the next few days.
Article / 05 June 2013 at 5:03 GMT

3 Numbers To Watch: EU Retail, US ADP Employment, US ISM Services

James Picerno James Picerno
editor/analyst / CapitalSpectator.com
United States

Wednesday is a busy day for economic news, starting with Services PMI updates for Germany and France, along with the second estimate of Q1 GDP for the Eurozone. In addition, keep an eye on three more numbers today: EU retail sales, followed by the ADP Employment Report and ISM Non-Manufacturing Index data for the US.

EU Retail Sales (09:00 GMT): Consumer spending in Europe continues to decline, but recent data holds out the possibility that the slide is stabilising. Even that small bit of optimism remains open for debate, but the Markit Eurozone Retail PMI data offer some support for thinking maybe, just maybe, the worst of the continent’s drought in consumption is over. The EU PMI number rose to an eight-month high in last week’s update for May. Although it’s still signaling contraction, the gain is the second in as many months.

The lagging retail sales numbers in today’s report from Eurostat aren’t likely to show much improvement, if any, but if the April consumption data doesn’t look too terrible there’ll be room for thinking positively for the May update. But that could still be asking for too much. As usual, the data for April retail sales in the leading economies has already been published. Consumption fell for both Germany and France, and so it’s probably a long shot that today’s EU data will provide any upside surprises. The Germany news was particularly disappointing, although some analysts said that the weather was to blame. Hope springs eternal, but it continues to walk on a razor’s edge.

That’s also a reminder that relativity still counts for a lot these days in the absence of stronger absolute numbers. On that note, today’s second estimate of first-quarter EU GDP—also released today at 09:00 GMT—may influence how the retail data is received in the market. Although the consensus view sees Q1 GDP holding at  minus 0.2 percent, a lower number would all but remove any tolerance for disappointment for the retail update.

 eu.retail.05jun2013

US ADP Employment Report (12:15 GMT): The last batch of economic news has been disappointing and so today’s ADP report—a preview of Friday’s official payrolls update from the government—will be closely analysed. Last Friday’s news that April’s personal income was flat while personal consumption expenditures slipped 0.2 percent reminded the crowd that America’s slow-growing economy remains vulnerable. That was also the warning in this week’s May release of the ISM Manufacturing Index, which reflected a slight contraction in overall output for the sector—the first dip into the red since last November.

If today’s ADP number is also weak, sentiment could take a hit as the market grapples with the third round of disappointing economic news. But economists think we’ll get a break today from the negative comparisons. The consensus forecast sees a substantial improvement in ADP’s estimate for jobs growth for May, delivering a considerably stronger monthly increase versus April’s weak gain. If that prediction holds, the news would at least keep the bears at bay for the day, although the real relief won’t come until (or if?) Friday’s labour market update from Washington confirms any good news in the ADP release.

us.adp.05jun2013

US Non-Manufacturing ISM Index (14:00 GMT): The services industry is expected to provide some positive support today for the still-developing economic profile for May. And not a moment too soon. Depending on what we see in the ADP report that precedes this number, the crowd may be desperate for some good news on the macro front.

This survey from a broad cross section of industries outside of manufacturing is expected to satisfy. The consensus forecast calls for a modest rise in the ISM services benchmark versus April and thereby keeping the index well above the neutral 50 level. Another positive reading that reflects expansion in this sector won’t be a silver bullet for the bulls, but it’ll provide a strong counterpoint to the weak manufacturing data. Indeed, for all the attention lavished on manufacturing, the center of economic gravity resides in services. That’s the good news... assuming that the forecast for growth in this release holds up.

us.ismservices.05jun2013

 

Disclaimer

The Saxo Bank Group provides an execution-only service and all information provided on Tradingfloor.com is solely for general information. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. Saxo Bank Group will not be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available as part of the Tradingfloor.com or as a result of the use of the Tradingfloor.com. Any information which could be construed as investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such should be considered as a marketing communication. Furthermore it is not subject to any prohibition on dealing ahead of the dissemination of investment research. Please read our disclaimers:
- Notification on Non-Independent Investment Research
- Full disclaimer

Show latest activity
Dismiss
Sorry, there was a problem communicating with the TradingFloor.com servers. We are working hard to solve this. Please try again later.
Oops! There was a problem communicating with the OpenAPI Portfolio service.
Oops! There was a problem communicating with the OpenAPI History service.
Oops! There was a problem communicating with the OpenAPI Reference service.
Oops! There was a problem communicating with the OpenAPI Root service.
Oops! There was a problem communicating with the OpenAPI Trading service.
Sorry, there was a problem communicating with the Financial Calender servers. We are working hard to solve this. Please try again later.
Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail