ADP Jobs Estimate Eclipses Influence of U.S. and Euroland GDP Data Also Released Today
October 30, 2024
Estimated private sector employment growth in October from Automatic Data Processing, Inc soared to 233 thousand new jobs. That 15-month high is twice what analysts were expecting and follows 159k in September, which was revised from an original estimate of 143k. If the labor market release due this Friday corroborates this sharp pickup in labor market demand, Fed officials will likely tilt back to more cautious rhetoric regarding the coming downward path of their interest rates.
A preliminary 2.8% estimate of third quarter GDP growth in the United States almost matched the robust consensus forecast of 3.0% and showcased a robust consumer appetite for spending. Personal consumption grew 3.7% at a seasonally adjusted annualized rate, up from 2.8% in the second quarter and 1.9% in 1Q. This was the fastest underlying pace in six quarters and resulted in the largest year-on-year advance (3.0%) since the last quarter of 2022. Personal consumption accounted for 2.5 percentage points (ppts) of GDP growth last quarter. An additional 1.3 ppts of growth contribution from non-residential business investment and government spending offset drags on GDP from net foreign demand, housing construction, and inventories.
Despite very robust consumer spending in the period, U.S. inflation measured by the PCE price deflator was benign. The quarter-on-quarter annualized pace of 1.8% overall and 2.2% excluding food and energy essentially aligned with the Fed’s 2% target, although year-on-year measurements of 2.3% and 2.7% were still slightly above.
U.S. equities fell moderately at the open. Earlier this Wednesday, share prices in the Pacific Rim closed down 1.6% in Hong Kong, 0.9% in Singapore and South Korea, 0.8% in Australia, and 0.6% in China but up 1.0% in Japan. Continental European stock markets had fallen over 1.0%, while the British FTSE was down only 0.4%.
A nine-basis point decline in the 10-year British gilt yield also stood out from the pack of other 10-year sovereign debt yields such as the U.S. Treasury bond and German bund, each of which was only a single basis point lower.
The dollar is modestly softer today against the yen, euro and sterling. A long-term development to watch emanating from the recent BRICS summit is their pledged effort to promote an alternative international monetary system that avoids reliance on the dollar and U.S. banks when undertaking financial transactions. This desire springs from a hope to avoid America’s perceived weaponization of the dollar via its use of various economic sanctions to punish geopolitical mischief by the likes of Russia, China, and Iran.
The price of Bitcoin fell 1.2% overnight, while those of WTI oil and gold rose by 1.8% and 0.5%.
The early 0.4% estimate of GDP growth in the euro area last quarter was twice as much as the consensus street forecast and represents the fastest quarterly pace in two years. Growth in Ireland (+2.0%), Spain (+0.8%) and France (+0.4%) outpaced that in Germany, Portugal, and Belgium, each of which printed at 0.2%. Italian growth stagnated at zero percent. Compared to the third quarter of 2023, Euroland GDP growth accelerated to a 6-quarter high of 0.9% from 0.6% in 2Q and 0.5% in the first quarter.
Other quarter-on-quarter European growth results last quarter reported today include +0.3% in the Czech Republic and and Austria, +1.1% in Lithuania, -0.4% in Latvia, -0.1% in Sweden, -0.7% in Hungary.
Mexican GDP last quarter accelerated to 1.0% (not annualized) from 0.2% in the second quarter, 0.1% in 1Q and -0.1% in the final quarter of 2023.
Economic sentiment in Euroland dropped to an 8-month low in October. In the industrial sector, sentiment was at a 27-month low, whereas confidence in the service sector matched September’s 8-month high. Consumer confidence was left unrevised from the preliminary pessimistic reading of -12.5, which nonetheless is its best level in 31 months.
Japanese consumer confidence slid to a 6-month low of 36.2 in October and has been below the 40 level ever since May 2019. In Singapore, business confidence dropped to a 7-quarter low of +10 last quarter from a 14-quarter high of +23 in 2Q 2024.
Swedish consumer confidence rose to a 34-month high this month, but business confidence there fell to an 8-month low.
U.S. mortgage applications ticked down 0.1% last week, marking their fifth straight weekly drop but the smallest of the sequence. The 30-year fixed mortgage rate jumped 21 basis points to a 3-month high of 6.73%.
Price data reported this Wednesday highlight the broadly shared pattern of inflationary forces unleashed after Covid during the 2020s. When people complain about their economies, they are really talking about inflation, which although now much lower hasn’t restored prices to their levels at the start of the decade.
- Year-on-year Australian consumer price inflation slowed to 2.8% in the third quarter from 3.8% in 2Q and 5.4% in the third quarter of 2023.
- Icelandic CPI inflation decelerated 0.3 percentage points ot a 34-month low of 5.1% in October, having peaked at 10.2% in February 2023.
- A zero percent inflation rate was touched this month in Slovenia where consumer price inflation had crested at 11.0% in August 2022. That’s its lowest in 44 months.
- Belgian CPI inflation of 3.2% in October was its highest since July but well down from 12.3% at the end of 2022.
- Italian producer price inflation in September was its most negative in three months (-2.0%) and down from +41.8% in September 2022.
- Austrian PPI inflation has imploded from +22.1% in September 2022 to -2.6% last month.
- Producer prices in the Philippines were 1.4% lower in September than in the same month a year earlier. That’s the most deflation in 7 months.
- Sri Lankan CPI inflation peaked at 67.4% in September and printed at a negative 0.8% this month.
- Ireland’s hamonized rate of consumer price inflation has receded from 9.6% in July 2022 to 0.1% currently.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: ADP estimate of U.S. private jobs growth, Euroland economic sentinment, Euroland GDP, U.S. GDP
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