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5 Jun 2013
Flash: Nerves ahead of Service Sector ISM today - DBS Group
FXstreet.com (Barcelona) - DBS Group analysts believe that with the manufacturing sector ISM dropping to its lowest level in 4 years, there’s bound to be some butterflies before service sector version (SSISM) is released today.
They see that markets are definitely looking for a rise in the SSISM to 53.5 from 53.1 in April that would surprise them. They moving but it doesn’t typically buck the trend. Manufacturing is the better barometer for swings on the margin and plainly note that the manufacturing measure has fallen 3 months in a row; the service sector version is steadier and slower the 4-year low there doesn’t suggest a pickup in services. They write, “Look for a 52-handle and a low one at that.”
Additionally, the employment subcomponent of the SSISM is perhaps the best single predictor of non farm payrolls. They comment that the trouble is it’s only a ‘predictor’ in contemporaneous terms – it moves with the payrolls, not ahead of them. Still, they write, “the two tend to run together and if they haven’t for a while, you know that one will be home soon. Payrolls have roamed ferociously in the past 4 months – 148k, 332k, 138k, 165k. The labor component of the SSISM has been much steadier. It has drifted from 57 in Feb, to 53.3 in March,to 52 in April. Another notch downward today would point to sub-100k payrolls on Friday.”
They see that markets are definitely looking for a rise in the SSISM to 53.5 from 53.1 in April that would surprise them. They moving but it doesn’t typically buck the trend. Manufacturing is the better barometer for swings on the margin and plainly note that the manufacturing measure has fallen 3 months in a row; the service sector version is steadier and slower the 4-year low there doesn’t suggest a pickup in services. They write, “Look for a 52-handle and a low one at that.”
Additionally, the employment subcomponent of the SSISM is perhaps the best single predictor of non farm payrolls. They comment that the trouble is it’s only a ‘predictor’ in contemporaneous terms – it moves with the payrolls, not ahead of them. Still, they write, “the two tend to run together and if they haven’t for a while, you know that one will be home soon. Payrolls have roamed ferociously in the past 4 months – 148k, 332k, 138k, 165k. The labor component of the SSISM has been much steadier. It has drifted from 57 in Feb, to 53.3 in March,to 52 in April. Another notch downward today would point to sub-100k payrolls on Friday.”