Monday, October 1, 2012

Market Update & Our September NFP Estimate

The market remains uber-excited about the better than expected September Mfr. ISM which came out earlier this morning.  S&P500 is up 0.9%.  And VIX just got back in the red, down only .1%.  With respect to S&P's sector ETFs, while the more cyclical sectors, such as materials, energy, financials, and industrials, are up 1%+, we note that the less cyclical consumer staples is also up nearly 1% while consumer discretionary is actually trailing staples, up only 0.5%.
Assuming a September ADP change of 140K, which is the Street's estimate, we expect to see a net change of 145K non-farm jobs in Friday's September employment report.  Our estimate is at the high-end of the Street's 75K - 162K range and certainly above the 113K consensus.  Our higher projection is based on the assumption of NFP growth in construction, manufacturing, education & health services, and temporary help services, partially offset by some weakness in retail trade and leisure & hospitality.  Given the upcoming elections in November, we also expect a slightly higher NFP count on the government side of its so-called services.  The Street expects a decline of 17K in the government NFP count. 

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