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Stellar ISM and weak ADP send mixed messages for US economy

Summary:

  • ADP employment change falls to 135k - lowest level in almost 4 years
  • ISM non-manufacturing surges to 12-year high of 59.8
  • DOE inventories show large draw of 6m barrels
  • Bitcoin comes under pressure despite reports of record volumes

The rate of pace of growth in the US labour market slowed markedly in September according to the latest ADP release. Whilst the indicator still rose, the number of jobs added was the lowest since October 2013. An employment change reading of 135k was a substantial drop on the 237k seen previously but the miss hasn’t come as too much of a shock with the data coming in close to consensus forecasts. 

However, it’s far from all doom and gloom for the US economy with the most recent data on the services sector has shown a stellar reading with the ISM non-manufacturing PMI rising to its highest level in 12 years. In fact there have only been 3 previous prints in excess of today’s number. The print of 59.8 was well above the consensus forecast of 55.5 and also the prior release of 55.3 and supports Monday’s manufacturing equivalent in painting a picture of strength in the US economy.  

Brent Oil is looking to end it’s recent run of lower closes today after the release of some supportive data relating to US stock piles. The weekly DOE inventories have shown their largest decline in 7 with a drop of 6m barrels far greater than the 0.5M decline that was expected. After a run of three weekly builds following the damage caused to refineries by hurricanes, today’s release is the second decline in a row and could signal the end to the increases seen in September.

Bitcoin has fallen lower today, and in doing so, price has dropped below a rising trendline from the September lows. In recent weeks there has been an impressive recovery in the market after it plummeted at the start of last month but today’s break could signal further downside ahead. The declines come after an interesting story from Bitpay which is the leading global Bitcoin payment service provider. Record volumes int he past 12 months are seemingly a positive sign of more trading activity in Bitcoin but the market has ignored this so far today and dropped lower. 

While manufacturing and construction slowed down in the past month, the UK services activity unexpectedly improved in September. All of that makes the data blurry with no an unequivocal signal for the Bank of England. Services PMI from the UK economy came in at 53.6 in September beating the consensus at 53.2 (the prior month saw the same value). The pound has risen since the release and is trading higher on the day against most of its peers. 

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