Key Events in the U.S. - Nomura
Analysts at Nomura offered a preview of U.S. data events.
Key Quotes:
"ADP employment:
In
line with our forecast for BLS private nonfarm payrolls, we forecast
that ADP private employment gained an additional 200k jobs in April
(Consensus: 195k).
Productivity Q1, preliminary:
Nonfarm
productivity growth has been sluggish, with growth in hours worked
outpacing output. Given that GDP grew at a slower pace in Q1 and growth
in hours worked from the employment report grew a bit faster in Q1 than
it did in Q4, Consensus forecasts a 1.3% q-o-q decline in Q1
productivity growth. The continued slow pace of productivity growth
suggests that the current pace of job creation without stronger economic
growth is unlikely to be sustainable. We continue to expect only a
gradual increase in productivity over the next several years.
Unit labor costs Q1, preliminary:
With
wage growth now at the forefront of the discussion of monetary policy
and inflation, unit labor costs could provide a good indication of
underlying inflationary pressures. Slower Q1 productivity growth will
likely prop up unit labor costs in Q1. As such, Consensus forecasts that
unit labor costs increased by 3.3% in Q1.
Trade balance:
The
advance report on international trade in goods showed that the goods
trade deficit narrowed in March. Based on the advance report, both goods
imports and goods exports decreased, but the fall in imports had a much
larger impact on the deficit than the drop in exports. Taking the
advance report on trade in goods into account, we forecast that the
trade balance narrowed significantly to -$40.0bn in March (Consensus:
-$41.1bn) from -$47.1bn in February. This full trade report will include
key information such as a detailed breakdown of exports by destination
and estimates for trade in services.
Factory orders:
Factory
orders have been shaky for the last year, as demand for manufactured
goods has fallen off with global demand slowing, the stronger dollar,
the slowdown in investment in the oil and gas sector, and domestic firms
still working through high inventory levels. Total orders of durable
goods posted a modest increase in March, due to defense transportation
orders. This suggests that we should see some increase in factory orders
in March. As such, Consensus forecasts that factory orders rose by 0.6%
in March after declining by 1.8% in February.
ISM non-manufacturing:
This
measure of activity in non-manufacturing increased in March after
slowing to start the year. That said, the index has consistently
remained above 50 and indicative of continued expansion in the
non-manufacturing sector. We expect the non-manufacturing sector to
continue to drive economic activity in the near term, as the industrial
sector struggles to adjust in a challenging environment. As such, we
expect the ISM headline non-manufacturing index to remain in expansion
territory at 53.5 in April (Consensus: 54.8).
