If disclosed in the standard it created this year, ahead of the tapering announcement in September and the NFP that will confirm action throughout the year, the generally unreliable ADP pointed to 374K employment growth for August. While the data for July was slightly revised from 330K to 326K, the current data missed the market expectation of 625K by a large margin.
If we look at the details; Employment increase is 86K in small companies, 149K in medium-sized companies and 138K in large companies. According to the sectors; 45K jobs were added in goods producing sectors and 329K jobs were added in service providers. The strong increase in service employment is a good sign. In the production of goods, the difficulties in procurement of raw materials and transportation have become challenging. Loss of momentum in job growth can also lead to a downshift in adding jobs. A situation that can be explained with the current conjuncture. We can also take into account delta effects, but if this effect becomes significant, it will have a total effect range rather than creating sectoral divergence. We are still in the zone of partial deceleration.
ADP – NFP comparison… (Bloomberg, ADP Research Institute, Bureau of Labor Statistics)
As of the second half of the year, we see ADP pointing to a downshift in new hires. In contrast, there is a non-consistent standardization in terms of the NFP-ADP relationship. You can see the divergence of the last 1 year in the chart. NFP is data with a stronger trend in general. NFP’s private sector data has not followed much in the same direction. Therefore, the direction of ADP is very incompatible with NFP. The importance of this realization comes from the following; As the Fed progresses on its tapering journey, a weakening in employment growth, where economic sustainability passes, means that the image will become blurred. Therefore, it creates a situation that goes out of the base scenario. Of course, before the NFP, it will be necessary to look at the employment details of the ISMs. Especially if the momentum of increase in service employment is satisfactory, it becomes a provider of tapering phenomenon. In the data to be announced on Friday, the headline NFP expectation is 748K, while the expectation for the private sector component is 652K.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
