7 May 2015
Weaker US ADP survey signals moderation in employment growth – BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, reviews the US ADP survey release, noting that the results signals towards a moderation in employment growth, and a sustained slowdown in jobs growth might weigh on the USD for longer in the near-term.
Key Quotes
“The US dollar has remained weaker in the Asian trading session after extending its correction lower yesterday following the release of the weaker than expected ADP survey.”
“It is almost a year to the day since the US dollar index bottomed following a similar weak start to last year. However, there is less convincing evidence yet in comparison to last year that the US economy is regaining upward momentum. As a result a bottom could prove more elusive for the US dollar in the near-term.”
“The ADP survey estimated that private employment growth likely moderated further increasing by 169k in April which compares to consensus expectations that non-farm private payroll growth will rebound back above 200k in Friday’s report.”
“A more sustained slowdown in employment growth would likely weigh for longer on the US dollar in the near-term. Last year the slowdown in employment growth proved short-lived as the three-month moving average for private non-farm employment growth accelerated from 194k/month in Q1 2014 to 274k in Q2.”
“Still we would not place too much emphasis on just on the ADP survey which may well underestimate and lag a rebound in actual employment growth. Other leading indicators like the ISM non-manufacturing employment sub-component and initial claims are pointing towards a more favourable outcome than the ADP survey.”
“The release of the non-farm payrolls report on Friday remains crucial for US dollar direction in the near-term.”
Key Quotes
“The US dollar has remained weaker in the Asian trading session after extending its correction lower yesterday following the release of the weaker than expected ADP survey.”
“It is almost a year to the day since the US dollar index bottomed following a similar weak start to last year. However, there is less convincing evidence yet in comparison to last year that the US economy is regaining upward momentum. As a result a bottom could prove more elusive for the US dollar in the near-term.”
“The ADP survey estimated that private employment growth likely moderated further increasing by 169k in April which compares to consensus expectations that non-farm private payroll growth will rebound back above 200k in Friday’s report.”
“A more sustained slowdown in employment growth would likely weigh for longer on the US dollar in the near-term. Last year the slowdown in employment growth proved short-lived as the three-month moving average for private non-farm employment growth accelerated from 194k/month in Q1 2014 to 274k in Q2.”
“Still we would not place too much emphasis on just on the ADP survey which may well underestimate and lag a rebound in actual employment growth. Other leading indicators like the ISM non-manufacturing employment sub-component and initial claims are pointing towards a more favourable outcome than the ADP survey.”
“The release of the non-farm payrolls report on Friday remains crucial for US dollar direction in the near-term.”