Previewing US jobs

Via Calculated Risk:

On Friday at 8:30 AM ET, the BLS will release the employment report for June. The consensus is for an increase of 165,000 non-farm payroll jobs in June, and for the unemployment rate to be unchanged at 3.6%.

Last month, the BLS reported 75,000 jobs added in May.

Here is a summary of recent data:

• The ADP employment report showed an increase of only 102,000 private sector payroll jobs in June. This was below the consensus expectations of 150,000 private sector payroll jobs added. The ADP report hasn’t been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth below expectations.

• The ISM manufacturing employment index increased in June to 54.5%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll increased 5,000 in June. The ADP report indicated manufacturing jobs increased 7,000 in May.

The ISM non-manufacturing employment index decreased in June to 55.0%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll increased 200,000 in June.

Combined, the ISM surveys suggest employment gains above the consensus expectations.

• Initial weekly unemployment claims averaged 222,000 in June, up from 213,000 in May. For the BLS reference week (includes the 12th of the month), initial claims were at 217,000, up from 211,000 during the reference week the previous month.

The increase during the reference week suggests employment growth below expectations.

• The final May University of Michigan consumer sentiment index decreased to 98.2 from the May reading of 100.0. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Conclusion:  The ISM reports combined were strong, however the ADP was weak. Opposite readings once again. Also the increase in unemployment claims during the reference week suggests a report below the consensus. Usually I put a little more emphasis on the ISM reports than the ADP report, but that was incorrect last month.    My guess is the report will be below the consensus, but there could be some bounce back from the weak report last month.

David Llewellyn-Smith
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  1. Yes, they said the same thing last month and were completely wrong. I hope you’re not paying for this tripe.

    • Scott, you are showing your ignorance.
      Bill McBride is a reasonable judge in a difficult area.

    • I reckon his report makes it clear it’s basically a crapshoot. In fact even once the figures are released they often get heavily revised afterwards. So hopefully no-one is trying to trade this sh!t!