Also on deck for release a little later is the February service sector ISM survey and the Fed’s Beige Book in the afternoon. The ADP report showed outsized weakness in the services side of the economy and it will be interesting if we will see validation for that in today’s ISM survey.
Beyond this U.S jobs data, it is useful to point to this morning’s positive PMI numbers out of Europe which follow the earlier strong Retail Sales data from the region. The growth momentum is particularly pronounced in Germany, but other countries like Italy, Spain and Ireland are also showing signs of improvement. This improving outlook for the region should help lessen pressure on the European Central Bank to ease monetary policy to spur growth and fight deflation.
The ADP report showed February private-sector jobs tally at 139K tally relative to expectations of about 160K and downward revision to the January numbers. Weather appears to be the culprit in the ADP numbers as has persistently been the case with all economic data lately and is weighing on Q1 GDP growth expectations as well. Consensus expectation for the Friday’s jobs report from the government’s BLS is was for headline gains of about 150K. This report is pointing to downside risks to those estimates.
This year’s unusually cold and stormy winter has muddied all economic data and today’s ADP and likely Friday’s BLS numbers are just further continuation of that trend. The hope is that we will move past this phase once the Spring thaw arrives, putting economic data back on the pre-Winter trajectory. Stock market investors clearly believe in this weather narrative and that’s why they have pushed stocks into record territory despite soft data.
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