US non-farm payroll additions being revised down after ADP payrolls shocker

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The first Friday of the month means only one thing so far as stock market traders are concerned: the US jobs report.


The non-farm payrolls (NFP), to give the August jobs report its official title, is due out at 1.30pm UK time. Analysts may well be downwardly revising their forecasts of the number of new jobs added to the US economy following Wednesday’s jobs report from private payrolls processing firm, ADP.


ADP reported 374,000 additions, which was well below the 625,000 economists had been expecting.


Fortunately, the ADP number seems to be about as good at predicting the official numbers as I am at choosing the winner of a selling plater at Fontwell, so downward revisions might not be necessary.


“This year the ADP report has ranged from 403k over the NFP in April to 373k below last month. That’s 185% above to 53% below. So I don’t think it has many implications for the NFP,” said Marshall Gittler at BDSwiss.


On the other hand, as Pantheon Macroeconomics observed, “the bottom line here is that the risk to the 725K consensus forecast is to the downside”.


Economists are currently expecting NFP to rise by around 725,000 – 750,000.


“The slowdown in payroll growth likely is a reflection of the clear Delta-driven wobble in the near-real-time indicators of consumers’ spending on discretionary services, including restaurant diner numbers and airline passenger numbers. The interruption to the upward trends likely is most pronounced in the southeastern quadrant of the country, where Delta has driven hospitalisations back towards–and in some cases, above–their winter peaks, though we note that restaurant diner numbers have softened even in New York, where Delta cases are quite low,” Pantheon noted.


In the UK, we have the Markit/CIPS UK Services PMI, with the final reading expected to be 55.5, compared to July’s reading of 59.6.


Significant announcements expected


Finals: Allergy Therapeutics PLC (AIM:AGY, FRA:HHU)

Economic data: UK/US services PMI, US non-farm payrolls, US unemployment rate

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