US June Employment Report: A Preview

Tomorrow, the BLS will publish June Employment report and it will give more details regarding the labor market situation. The Bloomberg consensus expects nonfarm payrolls to decrease by 10K in June to 165 K and unemployment rate to reach 7.5%, down from 7.6% in May.

 

It will be very difficult for economists to anticipate nonfarm payrolls to the extent that proxys showed mixed signals:
 
1/ (-) During the survey period (2nd week of June), the four-week moving average of initial claims increased from 340 K (previous survey period) to 348.5 K.
 
2/ (-) On the same period, continuing claims also rose from 2923 K in May to 2987 K in June.
 
3/ (+) The consumer confidence survey of Conference Board which is linked to labor market situation improved significantly in June. It increased by 7.1 pts to 81.4 (highest level since January 2008).
- Note that “Employment” component (Hard to get a job minus Plentiful) rose from -26.5 in May to -25.2 in June.
 
4/ (-) Employers announced 39,372 planned job cuts last month, up 8.2 percent from 36,398 in May, according to the report from consultants Challenger, Gray & Christmas, Inc. June’s layoffs were also up 4.8 percent from a year ago.
 
6/ (-) The small business index from Intuit showed 25,000 payroll jobs added in June, down from 35,000 in May.
 
7/ (+) ADP’s private payrolls jobs report shows a gain of 188,000 private sector jobs for June 2013 up from 134 thousand jobs in May.
 
8/ (+) In June, even if ISM Manufacturing “Employment” component was down from May to 48.7 (first contraction since Oct 2009), the trend was brighter in Services with employment component reaching its highest level since February 2013 at 54.7.
 
9/ (+) Online advertised vacancies rose 52,900 in June to 4,980,300, according to The Conference Board Help Wanted OnLine (HWOL) Data Series just released.
 
10/ (+) Gallup’s unadjusted unemployment rate for the U.S. workforce was 7.8% in June, statistically similar to the 7.9% in May, and the 8.0% in June 2012. Gallup’s seasonally adjusted U.S. unemployment rate for June, however, was 7.6%, down from 8.2% in May.
 
11/ (-) The National Federation of Independent Business said the net change in employment ticked down by 0.09 workers per firm after slipping 0.04 in May.
 
These data sent mixed signals nevertheless it seems that hirings were weaker in manufacturng sector and stronger in services. My feeling is that the climate was milder in June which could be a boost both for catering, leisure and also construction. As a consequence, I expect a slight improvement in nonfarm payrolls and a number above the consensus.