Payroll Puzzle


Lets make it clear: there are not many on the market not being completely focused on the US payrolls report at the moment. So let’s heat up the air a but more. We presented a view from Credit Agri-cole that seems to be moderately bullish on the report, we presented warnings from Goldman Sachs who showed that August readings are suspiciously low (a possible flaw in the model), now lets take a look at the ISM, where we get they key indications from business.

Both sub-indices  declined in August - manufacturing and non-manufacturing. However in services the subindex remained at a still high level of 56 pts. and because services have such a high share in the economy, the composite employment index remained above 55 pts. (55,3 to be precise).  That’s very close to 6mva of 55,5 pts. and higher than average for 2014 (54,8 pts.).

When we look at employment, 6-m average is at +213k while 2014 average was at +254k. From that perspective, a consensus of +217 looks realistic.