Spring has Sprung in the US, Yet Again - SocGen
Kit Juckes, Research Analyst at Societe Generale, suggests that
yesterday’s strong US non-manufacturing ISM release (55.7 after 54.4
last month) dragged the composite index back up for a third month in a
row.
Key Quotes
“The picture looks
familiar – a falling ISM at the start of the year heralding soft Q1 GDP,
and a bounce as soon as spring turned up. GDP growth has averaged 2.1%
for the last 5 years, and can go on doing that until it runs out of
spare labour.
Productivity has fallen for the last two quarters,
boosting unit labour costs and causing concern about the profit cycle,
but that isn’t likely to de-rail the ‘recovery’ unless/until wage growth
accelerates significantly and the Fed tightens a fair bit more.
On
we move to tomorrow’s payroll data, where the soft ADP print yesterday
preps the market for a potentially weak figure though I’d note firstly
the poor correlation between ADP and the first release of NFP and
secondly the fact that a 156k increase was in any case within one
standard deviation of the recent average increase. In other words, it
tells us very little.”
