In contrast, nonresidential construction spending is up 18%, a gain
large enough to offset $42 billion of the $75 billion decline in residential
construction spending that took place in the first 11 months of 2006.
The weakness in residential construction spending is likely to wane slightly in
2006, but the strength in nonresidential construction might slip a bit, leaving the overall picture little changed. Nevertheless, it would still be
better than 2006.
Weakness in ADP's employment data could well reflect fallout from the
housing sector's weakness, although this is also debatable, and the bond
market has thus far taken the side of the ISM figures.
Interesting is ADP's
statement that "Employment records get cleaned up in December, and this
involves jettisoning the names of people who left earlier in the year, so
employment tends to decline in December'' among firms in ADP's sample. So if
there was one month where seasonal adjustments might be a source of
uncertainty, December would be it.
This might be a good reason to play up
the ISM and play down ADP, but the debate is wide open.
P.S. Will you be there when Cramer makes his next move?
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Tony Crescenzi Blog ADP Data Lower Jobs Forecasts 1/3/2007 9:26 AM EST If ADP's forecast is accurate, its monthly payroll forecast will grow increasingly important.
Tony Crescenzi Blog Seven Reasons to Downplay the Yield Curve 12/29/2006 3:00 PM EST The yield curve provides important information, but I feel the message should be watered down a bit.
Tony Crescenzi Blog Rate-Cut Odds Rise 1/3/2007 12:02 PM EST Although it's not until the May FOMC meeting that the cut likelihood increases.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
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