Macroeconomics: The Day Ahead – 4 November 2020

Good Morning: The Long & the Short of it and The Bigger Picture

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

  • ‘Too close to call’ US election leaves array of Services PMIs, US ADP Employment as little more than statistical roadkill; ECB speakers, Polish rate decision, EU Finance Ministers meeting, plenty more earnings
  • Services PMIs: Asia strength to contrast with Eurozone weakness, US  Non-manufacturing ISM seen expanding at robust pace
  • US ADP Employment expected to post more modest gain; seasonal labour demand the key wild card


While there are the usual round of Services PMIs from around the world to digest, along with the US ADP Employment estimate and Trade Balance, and some ECB speakers and an expected no change (0.1%) from Poland’s NBP, it will be the unfolding drama of the very tight US election contest that sweeps everything else to one side. The latter looks to be the ‘nail biter’ that many had predicted, and that markets fear, the question is then how long the recounts and legal challenges will be drawn out.


World – Oct Services PMIs

– As was already evident in the G7 flash PMIs, the contrast will be between the robust overnight reading in China, along with a solid pace of expansion in the USA, and a further contraction across the Eurozone as the rapid rise in infection rates and associated lockdown measures take a heavy toll on the services sector, with Spain’s state of emergency weighing especially heavily (forecast 40.0 vs. Sept 42.4), and the risk of downward revisions to France and Germany, and indeed the still expansionary reading in the UK. However this really no more than a confirmation of what is already well documented, and the key question is how much damage will the fresh set of necessary measures to try and contain the spread of the virus do to an already heavily scarred and beleaguered sector.


U.S.A. – Oct ADP Employment

– As with Friday’s Private Payrolls, ADP Employment is expected to have slowed to 650K vs. September’s 749K, with much depending on how the stronger labour demand evident in the Claims data and surveys is offset by rising permanent layoffs as Congress failed to replace the Payroll Protection Programme (PPP) (with the assumption that census related hiring will likely tail off and weigh on headline Payrolls). The seasonal adjustment for October assumes a strong level of holiday (Thanksgiving) related hiring, which may prove to be rather more sluggish this year, above all given the latest rebound in infection rates, and imparts some downside risk.


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