Stocks today were indicated to open essentially flat even before
this morning's ADP report and the labor market report, which didn't
add any excitement. The government jobs report coming out on Friday
is the key economic read on the docket now.
The ADP read came in tad bit below estimates at 208K for November
vs. 233K in October and 213K in September. The November tally is
the 8th straight month of job gains in excess of 200K. Importantly,
the tally for October was modestly revised higher. The consensus
expectation for Friday's BLS report is for 'headline' gains of
230K, which includes government jobs that have been averaging in
the 5K to 10K monthly level lately.
As such, today's ADP report wouldn't have much bearing on current
BLS estimates, though the two reports can divert in a big way from
each other at times. This was particularly the case a few months
back when the two reports diverged in a big way in August, though
that month's gap has since been narrowed a bit in subsequent
Today's ADP report showed broad-based gains, with small businesses
adding 101K jobs, medium-sized businesses adding 65K and large
businesses adding 42K. The goods-producing sector added 32K jobs in
November, down from the 46K tally in October. The Construction
industry added 17K jobs compared to October's 26K tally while
manufacturing's 11K jobs for the month were about in-line with the
prior-month's 13K. The service sector added 176K in November, up
from October's 187K, with professional and business services
producing strong numbers.
In terms of market impact, this report reconfirms what we have
known for some time - that U.S. economic growth is looking up even
as the outlook for the rest of the world is coming down. The growth
picture beyond the U.S. borders isn't looking very promising as
this morning's composite Markit PMI survey for Europe shows. Market
participants expect that the persistently weak run of European data
will prompt the European Central Bank to start implementing the
type of monetary policy that the U.S. Fed is getting out of and
that the Bank of Japan is also undertaking at present.
Not much is expected from tomorrow's ECB meeting, but hopes remain
high that a full-fledged QE program for the region will get
underway some time in early 2015. It is these hopes that has pushed
lower the region's bond yields as well as the exchange value of the
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