Based on some of the latest economic indicators, it appears that although the economy is growing, it is not as much as many have been expecting. ISM services employment sub-index and the ADP report have also created some doubts as whether or not Friday's BLS employment report will meet/exceed expectations. Although we view economic growth as moderate at best, our model indicates that Friday's NFP count will slightly beat the lowered expectations. Our brief summary of some of the main economic indicators released this week is followed by our NFP estimate.
ISM manufacturing index for March, released on Monday, disappointed as we had assumed it would. But we did not expect such a significant miss. The index came in at 51.3 versus our 53.8 estimate and the Street's 54.0. The ADP employment report released on Wednesday morning was also not as encouraging as many economists expected, coming in 47K below consensus. However, we note that the Feb. number was revised higher by 39K, partially offsetting the miss. ISM services index also missed expectations, 54.4 versus 56.0.
Regarding Friday's upcoming BLS employment report, we expect an increase of approx. 200K in the NFP count. The Street's number is 193K. Yes, the ADP report was a miss, but we did see a downward trend in initial jobless claims from the last week of Feb. until the third week of March. In addition, while the ISM non-manufacturing employment sub-index declined, the same sub-index for manufacturing did increase for the month of March; and both indicated growth (above 50.0). We are not suggesting that the state of employment is surging in terms of NFP growth. In fact, our estimate indicates a slower growth than the previous month which saw an increase of 236K, but again, it is slightly higher than the consensus.
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