Since Friday is a federal holiday, the Bureau of Labor Statistics will release its jobs report for June 2014 tomorrow. Both ADP and Gallup have their usual leading indicator surveys out this morning, and the news looks relatively good from both. The private sector added 281,000 jobs according to the ADP estimate, the highest growth in more than a year:
Private sector employment increased by 281,000 jobs from May to June according to the June ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. …
Goods-producing employment rose by 51,000 jobs in June, up from 31,000 jobs gained in May. The construction industry added 36,000 jobs over the month, more than double the May number. Meanwhile, manufacturing added 12,000 jobs in June, up slightly from last month.
Service-providing employment rose by 230,000 jobs in June, up from 148,000 in May. The ADP National Employment Report indicates that professional/business services contributed 77,000 jobs in June, up from 46,000 in May. Expansion in trade/transportation/utilities grew by 50,000, up from May’s 36,000. The 11,000 new jobs added in financial activities was about double last month’s number.
The job growth, if sustained by the BLS, gives some reason for optimism after the -2.9% GDP move in Q1. Job creation in the ADP report has been somewhat muted in 2014, although the BLS figures have exceeded ADP’s measures recently. This chart shows the trend over the last year:
In the past, ADP has overshot the official BLS numbers more often than underestimating them, though. This jump looks a little unusual, especially with May’s durable-goods drop of 1%, but most other indicators have been generally positive. Even if this falls back into an older ADP pattern of overestimation, the range of expectations would be between 170,000 and 200,000 for tomorrow’s report — not great, but certainly not what one would expect after a contraction of -2.9% in the previous quarter either.
Gallup’s latest survey gives some more reason for optimism:
The U.S. Payroll to Population employment rate (P2P), as measured by Gallup, continued to climb in June. The percentage of Americans employed full time for an employer last month, 45.0%, is up from 44.5% in May and ranks as one of the highest rates since tracking began in January 2010. The high of 45.7% was measured in October 2012.
It should be noted with some caution that this measure is relatively new, implemented well after the Great Recession and not tracking particularly well to the BLS’ own measures of workforce participation. Its all-time high of 45.7% in October 2012 correlates to 63.7% in the civilian workforce participation rate and 58.8% in the employment-population ratio, both near decades-long lows. The latter is only marginally better at 58.9% for May 2014, while the former sank to a 36-year low of 62.8% in both April and May.
Stiil, it’s a significant uptick, and goes with other measures of improvement in Gallup’s survey:
Gallup’s unadjusted U.S. unemployment rate for June was 6.8%, down from 7.0% in May — marking the lowest monthly rate Gallup has measured since it first began tracking employment in January 2010. This continues an almost unbroken decline in unemployment since early 2011, when the rate peaked above 10%.
Gallup’s seasonally adjusted U.S. unemployment rate for June dropped even further, from 7.2% to 6.5%. This is also the lowest Gallup has recorded for this survey. This rate is calculated by applying the adjustment factor the government used for the same month in the previous year. Last year, the government adjusted June’s rate downward by 0.3 points. The exact adjustment the government will use for June 2014 will not be known until Thursday’s BLS release.
Gallup uses similar methodology as the BLS does for these numbers, but polls at different times. We’ll see if the BLS figures pick up on the same growth Gallup does, but these two reports should raise the expectations for tomorrow’s announcement from BLS.