There’s no reason to be gloomy after today’s US data
There’s no reason to be downbeat after the latest ISM non-manufacturing and ADP surveys from the US, says Capital Economics.
The ISM non-manufacturing index rose to 54.0 in January from 53.0 in December, and the research group feel more confident the recent weaknesses seen in some data is just down to the temporary extreme cold snap the country’s been experiencing.
At face value, the two ISM survey are consistent with annualised GDP growth slowing from the fourth quarter’s 3.2 per cent to around 2.0 per cent. But with the manufacturing index temporarily depressed, growth of 2.5 per cent in the first quarter seems more plausible.
The 175,000 rise in the ADP measure of private sector employment in January, not far below December’s gain of 227,000, is another sign the economy isn’t losing momentum.
Although ADP isn’t necessarily seen as a useful leading indicator of non farm payrolls, it’s not as vulnerable to weather distortions as official data.
Given that, Capital Economics says it’s happy with its forecast that December’s payroll number was a one off and Friday’s payroll numbers will bring a rebound of around 200,000.