What to Expect From Labor Department on Unemployment and Payrolls

This Thursday will mark a very unusual event in economic reporting. Since this week holds the first Friday of the month, we are supposed to get the Labor Department’s Unemployment and Payrolls report. That will now come on Thursday morning due to U.S. financial markets and government offices being closed for July 4.

24/7 Wall St. wanted to make a preview of the report, including some of the more recent reports that may have acted as a harbinger for the formal Labor Department report. Bloomberg is looking for unemployment to be flat at 6.3% in June, followed by nonfarm payrolls of 211,000 and private sector payrolls of 210,000.

We would point out that May’s unemployment rate was 6.3%, nonfarm payrolls were 217,000 and private sector payrolls rose by 216,000. The unofficial expectation should have ratcheted higher after Wednesday’s ADP report, but a weaker TrimTabs report and other mixed data from other releases (see below) may have tempered that gain.

ADP’s projection was that private sector payrolls rose by a sharp 281,000 jobs in June. Bloomberg was expecting only 213,000 for June, and the May reading was only 179,000. This was a monstrous number. TrimTabs forecast that the U.S. economy added 174,000 jobs in June. Unlike ADP, the TrimTabs report was the slowest month in terms of jobs growth since February.

We have noted that ADP is watched more than TrimTabs. Still, the ADP surveys are more representative of small and mid-sized businesses that do not have their own human resources departments. Another consideration is that TrimTabs claims that its reading over the longer term proves to be more reliable than the reports from the Bureau of Labor Statistics.

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We did note other mixed data from various non-Labor Department sources in recent days:

• The ISM Manufacturing report for June showed that employment growth was very soft, at only 52.8.
• The PMI Manufacturing Index for June signaled that employment strengthened to 54.0, but suggesting that growth here currently remains no better than moderate.
• The Conference Board’s June Consumer Confidence signaled that jobs were getting better. Those stating jobs are “plentiful” rose slightly to 14.7% from 14.2%. Those claiming jobs are “hard to get” also fell modestly to 31.8% from 32.2%. Consumers expecting more jobs in the months ahead increased to 16.3% from 15.2%, and those expecting fewer jobs slid lower to 18.7% from 18.9%.