3 Numbers: Eurozone PMI Data Set To Reaffirm Stronger Q1 GDP Growth
James Picerno | Apr 05, 2017 01:32AM ET
- Revised Eurozone Composite PMI data set to project stronger GDP growth for Q1
- A slowdown in US jobs growth is expected via today’s ADP Employment Report
- US Non-Manufacturing Index due to pull back in March after touching 16-month high
GDP growth for the Eurozone in the first quarter receives a fresh update in today’s revision of the Composite PMI for March. Later, two US numbers will be closely scrutinised for fresh clues on the economy’s performance at the end of the first quarter: the ADP Employment Report and the ISM Non-Manufacturing Index.
Eurozone: Composite PMI (0800 GMT): Today’s revised estimate of GDP growth for the first quarter will probably reaffirm that output is on track to pick up from the 0.4% pace in 2016’s Q4.
Econoday.com’s consensus forecast sees the Composite PMI holding at 56.7 for March, matching the flash estimate that was previously published. The crowd’s forecast for today's release implies that the projected 0.6% growth for GDP in Q1 (via the PMI data) will also hold steady.
Growth estimates published by other sources are also pointing to a healthy improvement in output for Q1 GDP, which is scheduled for release in early May via Eurostat, the official statistics agency for the Eurozone. Last week’s projection based on the Euro-Coin Indicator, for instance, sees growth rising to 0.7%-plus.
Economic news this week supports the upbeat outlook. Unemployment in the euro area dipped to 9.5% in February, the lowest in nearly eight years. In the same month, retail sales in the currency bloc rose for a second month, increasing by a larger-than-expected 0.7% – the strongest monthly gain since last October.
An encouraging tailwind appears to be blowing, implying that today’s GDP-growth estimate via the Composite PMI will continue to project upbeat news for next month’s official Q1 release.
US: ADP Employment Report (1215 GMT): Today’s release offers a hard-data reality check for deciding if the upbeat macro outlook via soft data (business surveys) is resonating in the economy.
The stakes are a bit higher in the wake of Monday’s disappointing report on auto sales, which fell to a two-year low in March. Some economists see the slide in spending as an early warning sign for the economy. Will today’s data on private-sector employment for March provide more evidence that trouble could be brewing?
Get The News You Want
It may be too close to call, based on the crowd’s projection for last month’s payrolls. Econoday.com’s consensus forecast calls for a substantially softer increase in new jobs: 170,000 in March, down sharply from 298,000 in February. That’s not terrible, but the deceleration may be seen as worrisome in the wake of the weak data on auto sales.
“The jury is still going to be out,” an economist at Moody’s Analytics told Bloomberg. “The underlying health of the economy is somewhere between the hard and the survey data. I don’t think it’s doing as poorly as first-quarter GDP will likely show, and I don’t think it’s a strong as the surveys suggest.”
When in doubt, stick with a middling forecast.
US: ISM Non-Manufacturing Index (1400 GMT): The services sector is expected to remain a bright spot for the US economy in today’s economic news.
Although economists are projecting a modest decline in the ISM Non-Manufacturing Index to 57.0 for March from 57.6, the setback will leave this benchmark for the services sector at its highest level in 16 months and well above the neutral 50 mark.
But there may be a joker in the deck: the competing Services PMI, which nudged lower for a second month in the flash estimate for March. Although the 53.2 reading is still in growth terrain, the current estimate reflects the slowest increase for services in six months.
Markit noted that hiring in the services sector last month continued to ease after touching a 15-month peak in December. “The rate of services sector job creation in March was one of the weakest reported over the past three years.”
The ISM data, by contrast, is pointing to a considerably stronger trend for services.
Which index is wrong? It's too soon to know for sure, but we may be a bit wiser after the ISM update. With that in mind, don’t overlook a related report today: the revised Services PMI release for March, due at 1345 GMT.
Disclosure: Originally published at Saxo Bank TradingFloor.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.