US NFP and ISM Manufacturing amongst market movers today – Danske Bank

Analysts at Danske Bank suggest that today all eyes will be on the US labour market report and focus will remain on the unemployment rate and wage growth as these remain crucial for the Fed's decisions on quantitative tightening.

Key Quotes

“In line with the continued growth in employment, we expect further declines in the unemployment rate over time. However, we expect wage growth to remain around current levels for some time and to fail to show a significant pickup as the second round effects of several years with low inflation are dragging wage growth.”

“Focus will also be on global PMI manufacturing figures with the release of the US, euro area, Swedish and Norwegian figures. For the euro area, the most interesting numbers are the first releases in Italy and Spain. In Italy, the composite PMI new orders index is around the level in Germany, although the two economies are doing very differently. In our view, there are still significant challenges for Italy including some political risks. In Germany, in contrast, the upcoming election should not change much.”

“In the US, ISM manufacturing is also due for release. The gap between the ISM and PMI manufacturing figures is the biggest in 10 years, implying the two figures are sending mixed signals about the US economy currently. For the August print, we expect ISM manufacturing to stay around its existing high level and therefore not close in on the gap to PMI manufacturing. Note the preliminary PMI manufacturing figure has already been published and the final print should stay around the level seen in the preliminary report.”