Latest US data insights: a mixed picture - Nomura

Analysts at nomura offered an insight to the latest key data from the US economy.

Key Quotes:

"The latest ADP employment report indicated that private payrolls increased by 153k in December. Most of the weakness was from the goods producing sector which lost 16k payrolls in December, but the service providing showed steady gains, which appear consistent with the elevated reading of the employment index in December ISM nonmanufacturing survey. Although weaker than expected, the downside surprise in private payrolls was not very significant. Also, it is worth noting that the prior month’s reading of 214k (previously reported as 215k) was stronger than the report from the Bureau of Labor Statistics, likely due to imperfect seasonal adjustment around the holiday season. As such, today’s weaker-than-expected reading from the ADP report has not affected our forecast materially. Coupled with steady job gains, it appears that consumers felt on balance somewhat optimistic about the labor market conditions.

The labor market differential index (the share of respondents reporting that jobs are “plentiful” less the share of respondents reporting that jobs are “hard to find”) from the Conference Board’s Consumer Confidence report remained positive at 4.4 in December, although it edged lower from an upwardly revised reading of 6.6 in the prior month (previously reported as 5.2). In the manufacturing sector, business surveys suggest that employment activity in the sector was mostly positive despite some mixed readings from regional surveys.

"The latest ISM manufacturing survey, which gather information on a national level, imply that employment activity expanded at a steady pace in December, with its employment index inching upwards. 1 By contrast, regional measures of the labor market conditions were a mixed bag, signaling there are some downside risks. The index for employment in Chicago PMI slowed but remained relatively firm at 49.7.

Empire State survey suggests that employment conditions continued to worsen, with the indexes for number of employees and average workweek both remaining deeply in negative territory. But Philly Fed survey’s number of employees index marked 6.4, returning to positive territory after many months of negative readings. Taking the national and regional manufacturing survey data into account, we forecast that manufacturing payrolls were unchanged in December, a modest improvement from recent declines."