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US: Strong ISM manufacturing data raised hopes of better than expected jobs report - ING Sandeep Kanihama

Rob Carnell, Chief International Economist at ING, suggests that a better reading from the US June Mfg ISM has raised the probability of a better than expected jobs report.Key Quotes“The US Manufacturing ISM index picked up from 51.3 to 53.2 in June - consistent with a decent, but not amazing pace of manufacturing growth. As well as a good headline index, there were encouraging signs from new orders, including new export orders. 72% of manufacturing industries now report overall growth, up from 67% in May.But the real focus of this release is probably the employment index, with the US jobs report less than a week away. This index rose to 50.4, its highest since November 2015, though admittedly, manufacturing jobs make only a small contribution to the overall employment total. Nonetheless, this is a small crumb of confidence for our above-consensus 200,000 payrolls forecast (consensus 175,000) and we will be watching the non-mfg ISM employment index and ADP surveys carefully next week for further corroboration of a return to labour market strength.With markets pricing in virtually no Fed tightening in 2016 or 2017, an above consensus number could see bond yields, which have fallen heavily since Brexit, to push higher, if only for a while in these times of heightened uncertainty.”



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