he US Department of Labor releases its jobs report for June on Friday at 0830 ET/ 1330 BST. The market is looking for an increase of 90k jobs, which is more than the 69k registered for May. The market expects the unemployment rate to remain unchanged at 8.2%. Our propriety model is expecting a reading of 175k for June.
Employment – the bright spot in the US economy
Interestingly, compared with data disappoints elsewhere in June, employment indicators have held up fairly well. Although the ISM manufacturing index dipped to 49.7 in June, which is in contractionary territory, the employment index only ticked slightly lower to 56.6 from 56.9 in May, which is at the top end of employment readings over the past year. For the past six months the employment sub-index has out-performed the overall ISM manufacturing index, thus we could still see payrolls deliver a positive result for last month even if the manufacturing index is weak.
Job losses in the corporate sector fell in June, according to the Challenger report, which is also included in our prop model, dropping 9.7% on the month. This was the first decline in three months.
The other inputs to our model also suggest that we could see an improvement in the NFP data when it is released tomorrow. The ADP jobs report, which measures job creation in the private sector, also beat expectations and reported the strongest level of job growth since March 2012 at 176k. The ISM non-manufacturing employment index actually improved in June to 52.3 after falling to 50.8 in May.
