US Economy Update

Markets' focus is turning to services data and ADP employment report today. ISM non-manufacturing index is expected to drop slightly from 55.8 to 55 in Sep with price paid index dropping from 58.6 to 57. With Friday's highly anticipated NFP in sight, the employment component of the ISM non-manufacturing report will be closely watched. This employment component surprisingly dropped to contractionary level at 47.9 in Aug, marking first contraction since Jul 04. The private ADP employment report, which serves as a preview to NFP is expected to show 53k job growth in Sep. Monday's recovery in the employment component in the ISM manufacturing report provided some support to a rebound in NFP in Sep. Markets will look into whether the ISM non- manufacturing employment and ADP provide further support or offset that positive data.