US Daily Commentary

Research evidence excerpt

US Daily Commentary

ighted that the central bank should be clear

about what it understands about the economy and, equally important, what it does not

understand. He might be very comfortable with clarifying the Fed's reaction function, but

appears to be leaning toward getting rid of the dot plot and SEP table.

Overall, Warsh’s comments suggest he remains dovish, reducing the likelihood of a July

hike. We think he will advocate for a wait and see approach, avoiding any policy shift until

the Fed receives recommendations from the task forces.

ADPprivateemployment: ADP private employment gains decelerated to 98k in June

(Consensus: 120k) from 122k in May. Despite the softer headline print, hiring broadened

across sectors, with natural resources and mining the only industry reporting job losses in

June. Employment in financial activities and information sectors rebounded.

Notably, employment in the leisure and hospitality sector continued to slow, reinforcing our

view that some of the strength seen in the May NFP print was temporary and likely to

unwind in June (Fig.1) (employment in leisure and hospitality rose 70k in the May NFP

report). Overall, today’s report supports our forecast for a slowdowninJunepayrollgains,

while still pointing to a resilient labor market.

Pay insights data suggested that wage growth for job stayers remained sideways, while

wage growth for job switchers picked up slightly in the month.

ISMmanufacturing: The ISM manufacturing index ticked lower to 53.3 (Nomura: 53.7,

Consensus: 53.9). New orders and production declined slightly, but remained solid. The

largest contributor to the drop in the headline index was supplier deliveries (which has a

mixed read-through for growth since it often reflects supply-chain bottlenecks).