Wednesday, November 2, 2011

ADP Employment Report 110K vs 100K Expectation

I expected a lot of gaps up or downs this week based on the significant economic data - thus far, it has been accurate in terms of the gaps (we will be gapping up significantly today) but it has been for the wrong reasons (Europe, not the economic data).  Futures were up well in advance of any economic news today..... the bipolar market continues - buy anything that moves today, just as you sold anything that moves the previous two days.  Looks like either the market has calmed down about Greece and/or bears are running for the hills ahead of The Bernank.

ADP is out and we have a reading of 110,000 job gains versus expectations of 100,000.  September was revised up by 25,000.

By business size:
Small (<50): +58,000
Medium (50-499): +53,000
Large (>499): -1,000

All the job growth came in the services sector (+114,000) - goods producing sector (-4000) and manufacturing (-8000) were nowhere to be found.

All in all, more of the muddle through economy.  Not a recession, not much of an expansion... and not enough jobs to bring down the unemployment rate.  How much of this month's hiring was seasonal (retail).... and only to be fired in a few months is unknown.


Note: FOMC announcement comes early today (just after noon) since this is one of the days Bernanke will do a speech mid afternoon.  Via the normal media leaks, I'm leaning towards no action today - keep in mind the Fed has done major steps the last two meetings (no interest rate hikes until mid 2013 two meetings ago, and Operation Twist last meeting) so to do something massive three meetings in a row would be quite desperate.  Let's give it one more meeting. ;)

As an aside, Eurozone PMI came in at 47.1 versus the flash reading a week ago of 47.3.  This is down from last month's 48.5 and the third month of contraction.  Output and new orders are down to levels last seen in mid 2009.  It definitely looks as if Europe is hitting recessionary levels.  Additionally, Germany's unemployment rate - now the envy of the United States @ 7% - rose for the first time in two years.

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