FXStreet (Delhi) – Research Team at Deutsche Bank, notes that at present, there has been a growing divergence between the trend in the nonmanufacturing ISM employment series and that of the manufacturing ISM employment component and it remains unclear how the current divergence that began this past February will be resolved.
Key Quotes
“The employment subcomponent in the manufacturing ISM survey fell -2.9 points in October to a 47.6 reading. This was the lowest level since August 2009 (46.1), which was just two months after the last recession ended.”
“Surprisingly, the nonmanufacturing ISM has not yet shown the same weakness in hiring. The October results are released this morning, and we are expecting an employment reading on the nonmanufacturing ISM that is near its three-month moving average of 58.0, a result that would be consistent with our projection of a 175k increase in October nonfarm payrolls (150k private).”
“Since 1997, when the nonmanufacturing ISM was introduced, we count five periods when the spread between the two series was negative, meaning the index level of the manufacturing ISM employment subcomponent was lower than that of the nonmanufacturing ISM.”
“Historically, the outcomes have been mixed: There were two periods of steady job growth (9/97 to 9/99 and 10/12 to 10/13), two episodes of weakening job growth (3/00 to 5/02 and 2/05 to 9/07) and one period of rising job gains (9/02 to 1/04).”
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