3 Aug 2015
Fed hike on its way, ISM employment component on track - ING
FXStreet (Guatemala) - James Knightley analyst at ING Bank explained that the ISM manufacturing index appeared to have been leaked a little early today with the headline index coming in at 52.7 for July versus 53.5 in June.
Key Quotes:
"It is also weaker than the 53.8 consensus estimate.
The report in general is mixed to slightly positive. On the positive side the output and new orders components have both risen (output up 2 at 56.0 and new orders up 0.5 at 56.5). The new orders component is at its highest this year. This suggests decent growth in manufacturing activity both for July and coming months.
However, the employment component fell to 52.7 from 55.5, which is a bit of a concern given that the labour market is key to the timing of the first Fed rate hike - last week’s FOMC statement indicated that officials want to see “some” further improvement before tightening policy. That said, the employment component remains above the 6M average of 51.6 so it isn’t terrible and doesn’t alter the outlook for a 200,000+ reading for non-farm payrolls on Friday.
Given the positive growth story and the likelihood of a decent payrolls figure both this month and next we think that the Fed will deliver a September hike."
Key Quotes:
"It is also weaker than the 53.8 consensus estimate.
The report in general is mixed to slightly positive. On the positive side the output and new orders components have both risen (output up 2 at 56.0 and new orders up 0.5 at 56.5). The new orders component is at its highest this year. This suggests decent growth in manufacturing activity both for July and coming months.
However, the employment component fell to 52.7 from 55.5, which is a bit of a concern given that the labour market is key to the timing of the first Fed rate hike - last week’s FOMC statement indicated that officials want to see “some” further improvement before tightening policy. That said, the employment component remains above the 6M average of 51.6 so it isn’t terrible and doesn’t alter the outlook for a 200,000+ reading for non-farm payrolls on Friday.
Given the positive growth story and the likelihood of a decent payrolls figure both this month and next we think that the Fed will deliver a September hike."