In October, the ADP employment report came out close to expectations showing a decline in employment by 203 000, while a drop by 198 000 was forecasted. The previous figure was upwardly revised from -254 000 to -227 000. Looking at the details, employment dropped by 117 000 in goods-producing of which 65 000 in manufacturing. In the service-producing sector, employment fell by 86 000 in October. This outcome suggests that also the payrolls report might came out somewhat weaker than expected, but the correlation between the ADP report and official payrolls loosened recently and some special factors may be at play too.
The US non-manufacturing ISM showed an unexpected decline in October. The headline index dropped from 50.9 to 50.6, while a slight improvement was forecasted. The breakdown shows a mixed picture with improvements in new orders (55.6 from 54.2), business activity (55.2 from 55.1), new export orders (53.5 from 48.5), backlog of orders (53.5 from 51.5), supplier deliveries (50.5 from 50.0) and inventory sentiment (63.5 from 62.0). Employment (41.1 from 44.3), imports (46.0 from 51.5) and inventory change (43.0 from 47.5), on the contrary, deteriorated. Prices paid rose from 48.8 to 53.0 after falling significantly in the previous month. Although the headline index deteriorated somewhat, the underlying picture remains encouraging, while the labour market conditions remain weak.
Other: UK services sector expands for the 6th straight month
In the UK, the services sector expanded for the sixth consecutive month. In October, services PMI rose from 55.3 to 56.9, while the consensus was looking for only a marginal improvement. UK services PMI is now at the highest level since August 2007, which is an encouraging sign for fourth quarter GDP as the services sector is of major importance for the UK economy. In the euro zone, the final figure of October services PMI showed an upward revision from 52.3 to 52.6, compared to the first estimate.
