The Obama administration could dearly use some good news on the economic front, and according to ADP, they may get some tomorrow. The nation’s largest payroll-management firm projects an increase in private-sector employment of 157,000, a big jump from ADP’s fairly accurate prediction of May job creation (via National Journal):
Employment in the U.S. nonfarm private business sector rose 157,000 from May to June on a seasonally adjusted basis, according to the latest ADP National Employment Report ® released today. The estimated advance in employment from April to May was revised down, but only slightly, to 36,000 from the initially reported 38,000.
Today’s ADP National Employment Report estimates employment in the service-providing sector rose by 130,000 in June, nearly three times faster than in May, marking 18 consecutive months of employment gains. Employment in the goods-producing sector rose 27,000 in June, more than reversing the decline of 10,000 in May. Manufacturing employment rose 24,000 in June, which has seen growth in seven of the past eight months. These figures are above the consensus forecast for today’s report and for Friday’s jobs number from the BLS. Payroll employment growth at this pace usually implies a steady unemployment rate, perhaps even a modest decline. June’s figures suggest that the economic recovery, which slipped in the spring, might have found new traction in early summer.
That seems a little too optimistic, considering the economic indicators from May and April. Goods orders trended down, auto sales tapered off, and the level of weekly jobless claims hasn’t really budged in three months. Today’s report from the BLS shows a slight drop in claims, but still firmly within the Q2 range:
In the week ending July 2, the advance figure for seasonally adjusted initial claims was 418,000, a decrease of 14,000 from the previous week’s revised figure of 432,000. The 4-week moving average was 424,750, a decrease of 3,000 from the previous week’s revised average of 427,750.
The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending June 25, a decrease of 0.1 percentage point from the prior week’s revised rate of 3.0 percent.
The advance number for seasonally adjusted insured unemployment during the week ending June 25 was 3,681,000, a decrease of 43,000 from the preceding week’s revised level of 3,724,000. The 4-week oving average was 3,705,250, a decrease of 3,750 from the preceding week’s revised average of 3,709,000.
Reuters reports it as mildly good news, but also notes the unreliability of reports around the holiday:
New U.S. claims for unemployment benefits fell more than expected last week, government data showed on Thursday, but distortions associated with the holiday weekend and a government shutdown in one state made it difficult to get a clear view of the labor market.
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 418,000, the Labor Department said. …
A Labor Department official said given Monday’s Independence Day holiday, California and Virginia had provided partial estimates. In addition, the department had to make estimates for four states and territories.
The data also included about 2,500 claims from state employees in Minnesota following the shutdown on Thursday of the state government.
We’ll probably see an upward revision to this data in the next week or two, but we can also expect this week’s number (announced next week) to be artificially low thanks to the Monday holiday. Even with all of those caveats, the level didn’t drop appreciably from the ~425K range we’ve seen since early April, when claims rose from the ~380K level of Q1.
For that reason, and because the ADP report isn’t a perfect indicator by any means, I’m going to guess that actual job growth in tomorrow’s number will be closer to 90K (Bloomberg predicts 100K), and that the unemployment rate will bump slightly upward to 9.2%. What do you expect tomorrow’s rate will be? Take the poll: