Saxo Bank (Saxo Bank)
Finance  |  September 01, 2010 14:24:50

Job losses in the private sector will tell more


The risk to the recovery needed only better than expected data on consumer confidence in the U.S., which is a sign that any good economic data will lead to recovery. However, he maintains our position that the risk is generally not very freeing when we see further deterioration in the U.S. economy (and world).

ISM manufacturing is now a starter during the day and now we expect better value (53.6) than the consensus (52.8), although we maintain our view that the ISM manufacturing this year falls below 50 later this year. Better than expected ISM number is likely to lead to a further recovery of relief.

What is happening?
The manufacturing sector grew more slowly in August than in the previous nine months and we expect that today's report on the ISM manufacturing index shows. The overall economic slowdown was evident during the summer and we expect this will continue in the fall and winter. Virtually all regional PMI fell in August, which supports the view of the slowdown in the manufacturing sector in August.

ISM manufacturing today is not the only risk events will also be published estimate of nonfarm payrolls from ADP. The consensus expects growth in payrolls by 15,000, despite a very bad report on unemployment claims and generally deteriorating economic data in August. We expect an increase of 5,000, and private nonfarm payrolls forecast, estimated BLS shows an increase of 5,000 on Friday. Overall, this means that currently we expect an overall decrease of 110,000 nonfarm payrolls in August.The trend is clear, and do not expect that employment will improve significantly in the coming months.

MARKET SITUATION
Report from Conference Board announced yesterday that consumer confidence rose in August to 53.5 from 51 in July, which was enough to lead to recovery at risk despite the bad Chicago PMI index. If we look deeper into the message, the message was not as good as suggested revival of risk because the confidence was fueled exclusively by expectations, which rose to 72.5 from 67.5.

The current situation component fell to 24.9 from 26.4 and employment difference (differentia labor) l also decrease again, this time to -41.9 from -40.7. This indicator measures the difference between consumers who find work a lot and those who are ill hlredají.

Minutes of the FOMC meeting on the 10th August was not too exciting, but the FOMC reduced the number of predictions including GDP was revised lower to 3-3.5% range of 3.2 to 3.7% for 2010. Also at the rate of unemployment and various indicators of inflation has been negative revisions.

Minutes of the temporarily dampen risk-taking, but it quickly reverted back due to better numbers from Australia and China. Australian GDP grew by 1.2% in Q2 (0.9% exp. And 0.7% previously), while China's PMI rose to 51.7 from 51.2 and 51.9 and 49.4, respectively. In particular, the numbers from Australia in recent days were better, which helped the AUD to return from the August 25th lows

Mads Kofoed, market strategist, Saxo Bank
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