According to the ADP report, employment dropped by 298 000 in August, while the consensus was looking for a decline by 250 000. The July figure was upwardly revised from -371 000 to -360 000. The details show that employment dropped by 152 000 in the goods-producing sector, of which 74 000 in manufacturing (the smallest monthly decline since July 2008) and by 146 000 in the services sector. The outcome is a bit disappointing as it fell shy of expectations, but nevertheless fully confirms the gradual improvement of the conditions in the labour market. The ADP report lost part of its correlation with the official payrolls report and therefore we would wait for the latter before eventually recalibrating our view on the economy.

In July, US factory orders rose by 1.3%, while an increase by 2.2% was forecasted, but the previous figure was upwardly revised from 0.4% M/M to 0.9% M/M. The improvement was led by a 5.1% increase in durable goods order (upwardly revised), while non-durables fell by 1.9%. The improvement in durables was mainly due to nondefense aircraft orders. The inventory/shipments ratio dropped from 1.41 in June to 1.40 in July.


EMU: second quarter GDP confirmed at -0.1% Q/Q

The preliminary estimate of euro zone second quarter GDP confirmed the first estimate showing a contraction by 0.1% Q/Q. Looking at the breakdown, positive contributions came from household spending (0.2% Q/Q), government spending (0.4% Q/Q) and net exports as imports fell at a faster rate than exports. Gross fixed capital formation dropped by 1.3% Q/Q but the biggest drag came from inventory changes. The inventory correction has now most likely been completed and rebuilding of inventories should support growth in H2. National data showed that Spain posted the sharpest contraction, while Slovakia recorded the strongest gains.

In July, producer prices dropped by 0.8% M/M (-8.5% Y/Y) in the euro zone, while a decline by 0.6% M/M was expected. Looking at the details, the decline was led by energy (-3.1% M/M), but also prices of capital goods fell somewhat (-0.1% M/M), while non-durable consumer goods rose by 0.1% M/M. The data are however a bit outdated as we already received the CPI data for the month of August.