Private sector employment increased by 568K in September, according to data released by ADP today. We have obtained stronger data than the market expectation of 428K and the revised 340K employment increase for August. Regarding the data showing a relatively strong trend, limitedly affected by Covid-19 variant risks in terms of details and headline figures; The risks of the following period may occur in different layers. At this point, the possible shutdown risk of debt ceiling uncertainty and global stagflation concerns may lie rather than variant risks. Therefore, we have to look at other developments from China as well as the economic situation of the US.
If we look at the details and sectoral distribution of ADP; In September, employment creation was realized on the entertainment and accommodation side with 226K. As the services constitute the main component, it can be said that the degree of being affected by the risks of Covid Delta is minimal. Education and health increased employment by 66K, professional services by 61K, transportation by 54K, manufacturing by 49K, construction by 46K, other services by 28K and finance by 22K. Increasing employment in manufacturing and construction is good news, as input supply and rising production costs are factors that reduce profit margins in these sectors. At the same time, this cost and supply effect could negatively impact the employment curve as it poses a potential slowdown threat. We do not see this realization in September data details.
If the details obtained from the ISM data are to be confirmed either, rather than ADP (weak correlation with NFP); We can see a positive increase on the NFP side on Friday as well. Payrolls growth is expected to be 488K. Even a data that is in line with expectations will be evaluated positively enough, while looking more at the cyclical tapering phenomenon. Against this; borrowing limit and China uncertainty may still create uncertainty regarding the November FOMC. The tapering delay between September and November may also be based on these short-term uncertainties and risks at the moment. However, inflation expectations in the US are increasing and there is a serious shift in short-term inflation expectations compared to the projection levels in June. In the meantime, an effect that can create stickiness for a certain period of time, such as a global energy bottleneck, has been added to the model. As a matter of fact, the market will evaluate the factors that stratify inflation in terms of “tapering” while looking at the NFP.
Kaynak Tera Yatırım-Enver Erkan
Hibya Haber Ajansı