ADP Private Payrolls & Services ISM Top the US Headline Session

Renewed job creation is perceived as one of the key pillars of the US recovery story, but how solid is its foundation? According to the Conference Board global research group, April job growth is stalling. This bodes rather poorly for ADP payrolls and the ISM services data...

Monthly ADP payrolls report is widely seen as a dress rehearsal for the Friday non-farm payrolls. Expected at 8:15ET, consensus for the figure is around 200K, roughly on par with the past 3 months. However, a much-less publicized Conference Board assessment of labor demand paints a more bleak picture. Posting of new online job ads in February fell by nearly 20% on both sequential and year-ago basis - the first such declines of this year! We see this leading indicator as a warning signal for downside risk on both ADP and NFP data.

Likewise, strong ISM manufacturing report from earlier this week may not be echoed by the more encompassing for the US economy services indicator on tap for 10amET. Last month, the services ISM marked a 3-month low of 57.3 - well below 59.5 consensus. This time around, analysts forecast a rise to 57.9, even though the Institute's research chief Nieves warned about potential downside impact from Japan earthquake. Analyst consensus for comparable ADP and improved services ISM may prove to be too optimistic, suggesting economic green shoots still require continued liquidity.

In energy, weekly DOE inventories expected at 10:30ET see a build of 1.9M barrels. Overnight, private sector's API forecasts saw a 4th consecutive weekly build, further pressuring oil prices below $110.50/brl. Crude is fast approaching its key psychological support at $110/brl.

Agrium (AGU), MGM Resorts (MGM), and Time warner (TWX) are among the key US companies reporting Q1 results pre-market open. The first two will look to improve on the horrendous Tuesday reports from their sector cousins Archer-Daniels and Las Vegas Sands. Time Warner Corp (TWX) will also release a quarterly update.

GBP Shrugs the 4-month low in April construction PMI as risk appetite stabilises ahead of the flurry of the aforementioned key US data. EURUSD holds well above the Apr 18 trendline support of 1.4750.

By GG - AshrafLaidi.com Staff