Market Mover - BNP PARIBAS - Investment Services India

Key Data PreviewChart 11: US Non-Farm ProductivityBNP Paribas Forecast: Strong ReboundUS: Non-Farm Productivity & ULC (Q3, preliminary)Release Date: Thursday 3 NovemberNon-farm productivity is forecast to surge by 3.8% q/q AR inQ3 following a 0.7% q/q saar drop in Q2 as output grewmuch stronger than aggregate hours worked. Non-farmbusiness output grew sharply rising 3.8% saar in Q3following a 1.8% pace in Q2. Meanwhile, aggregate hoursworked growth was flat in Q3. Unit labour costs growthshould fall into a negative territory posting -2.5% q/q saar inQ3 following a 3.3% clip in Q2. Compensation grew muchslower than output during the forecast period. Going forward,the odds are high that productivity gains will slow to a moremoderate pace.Sources: Reuters EcoWin Pro% q/q, AR Q3 (p) Q2 Q1 Q4NF Productivity 3.8 -0.7 -0.6 2.2ULC -2.5 3.3 6.2 -1.6Key Point:Non-farm productivity is forecast to rebound strongly inQ3 as non-farm output grew much stronger thanaggregate hours worked.Chart 12: US NM ISM Employment & PayrollsSources: Reuters EcoWin ProOct (f) Sep Aug JulNM Composite 54.0 53.0 53.3 52.7Prices Paid 60.0 61.9 64.2 56.6BNP Paribas Forecast: IncreaseUS: ISM Non Manufacturing (October)Release Date: Thursday 3 NovemberWe look for the non-manufacturing ISM to increase to 54.0 inOctober from 53.0 in September. The increase in the indexshould reflect a recent pick up in the retail and nonresidentialconstruction sectors, while the government sectorcontinues to shrink. The index also includes a sentimentcomponent that we think will rise on the back of better-thanexpectedeconomic data as of late. Our forecast would beconsistent with growth in the non-manufacturing sector, albeitat a moderate pace. We expect a retrenchment on the part ofconsumers in Q4 and for the non-manufacturing ISM to fallbelow 50 by the end of the year. We look for the Octoberreading on the prices paid index to fall to 60.0 from 61.9reflecting the recent broad-based decline in commodityprices.Key Point:An estimated increase to 54.0 in the NM ISM indexshould reflect a recent pick up in the retail and nonresidentialconstruction sectors, while the governmentsector continues to shrink.Market Economics 27 October 2011Market Mover76www.GlobalMarkets.bnpparibas.com