In February, the US ADP employment report came out in line with expectations, showing a decline in employment by 20 000. The previous figure was however downwardly revised from -22 000 to -60 000. Looking at the details, employment fell by 37 000 in the goods-producing sector although the manufacturing segment added 3 000 jobs. In service-producing, employment rose by 17 000 in February. The ADP report was not much affected by the weather, ADP’s Prakken said, but the severe winter storms in February will probably depress the payrolls figures and therefore the payrolls report might come out significantly weaker than the ADP.

In February, the non-manufacturing ISM survey surprised on the upside of expectations, as its headline index rose from 50.5 to 53.0, while the consensus was looking for an outcome of 51.0. Also the details are encouraging with improvements in business activity (54.8 from 52.2), new orders (55.0 from 54.7), employment (48.6 from 44.6), new export orders (47.0 from 46.0), imports (48.5 from 47.0), supplier deliveries (53.5 from 50.5) and backlog of orders (46.0 from 45.5). Inventory sentiment worsened (60.0 from 64.5) and also inventory change (45.0 from 46.5) dropped in February. Inflationary pressures eased somewhat as prices paid fell from 61.2 to 60.4. Recently, the recovery in the non-manufacturing ISM appeared to lag somewhat the improvement in the manufacturing ISM, which indicates that conditions are also normalising in the US services sector.


EMU: retail sales dropped in January on bad weather

In January, euro zone retail sales fell by 0.3% M/M, exactly matching expectations. The previous figure was however significantly upwardly revised from 0.0% M/M to 0.5% M/M. The details show that sales of both food, drink & tobacco (-0.1% M/M) and non-food products (-0.6% M/M) fell in January. The harsh winter conditions with heavy snowfall across many countries, likely encouraged shoppers to stay at home. Nevertheless, retail sales are likely to stay weak in the coming months, remaining a drag on growth.


Other: UK services PMI at 3-year high

After a significant decline in January, UK service PMI rose more than expected in February. The headline index rose from 54.5 to 58.4, the highest level in more than three years. The new business sub-index rose from 53.4 to 57.5, the highest number since September 2007. But in the UK, there appears to be some dispersion between the PMI’s and the hard data. In the euro zone, the final figure of services PMI showed a slight downward revision (51.8 from 52.0) compared to the first estimate.