Investors fret about the state of the world economy, as Australia’s economy falters and Chinese stocks drop again * Summary: Shares inching up despite growth concerns * Lagarde: Hopes for ‘orderly’ rebalancing * Chinese stock market falls despite interventions * Fears of new turmoil next week * In Greece, Syriza’s lead narrows.... 2.36pm BST After three days of decline, US shares have recovered some ground in early trading. The Dow Jones Industrial Average is up more than 200 points in the first few minutes, while the S&P 500 is up more than 1%. 2.22pm BST The ADP jobs survey may have perked up markets for the moment - on the basis perhaps that it was weaker than expected therefore the US Federal Reserve may not raise rates this month after all. But it gives little real guidance for Friday’s non-farm payroll numbers, according to ING Bank’s Rob Carnell. He said: With the ADP survey the only remotely accurate US non-farm payrolls directional indicator, the latest release might suggest that there is unlikely to be any significant deviation of Friday’s payrolls from the 215,000 figure printed last month. The ADP employment total rose by 190,000, up from a downward revised 177,000 in July (previously 185,000). That said, a 13,000 monthly difference looks insignificant relative to the noise in this series, and a more reasonable description of the figures would be to say that there is no strong directional steer from the ADP this month. One interpretation of this would be that the August payrolls figures will be close to the 215,000 result in July. But that would be to ignore the scope for occasional but sizeable divergences in these two series. A better interpretation would be that anything is still possible from Friday’s labour report figures, and scope for market surprises in both directions remains, though the probability of this coming from the payrolls figure looks smaller at this stage. There are, however, other parts of the report that might still inject some market volatility. The household employment survey in July was quite weak (+101,000), so we could be looking at some catch up in the region of +300,000 this month. So long as this isn’t totally swallowed up in a surge in the labour force, which was also soft in July (+69,000), and with some helpful rounding, we might see more than a 0.1 percentage point fall in the unemployment rate, taking it down to 5.1% (consensus is for a fall from 5.3% to 5.2%). Finally, there is the hourly wages data. We have been looking in vain for a pick up here for longer than we care to remember, and anecdotes of rising wages seem to be failing to translate into higher official numbers. But the recent Conference Board labour data gave cause for some renewed optimism on the wages front, and if this is borne out, then there is just possibly some scope for wages to send a quite confusing message against the back of a non-descript payrolls number. Continue reading...
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