The king of economic data is back — the monthly US employment report, of course. In June, the Bureau of Labor Statistics (BLS) reported that 288,000 new payrolls were added to the economy, a significant surprise to the upside compared with the 215,000 expected by the consensus and the 224,000 payrolls added in May.
Available data for July (and there is less than normally available as neither the manufacturing nor the non-manufacturing ISM report has been released yet) suggests that that the labour market remained strong last month, but still it will be difficult to match June's 288,000. Let's have a look:
- The oft-maligned ADP employment report showed that the private sector created 218,000 new jobs in July (net) though the consensus had been gunning for 230,000. The ADP figure has been getting a lot of blame this year for its poor track record, but in June it showed 281,000 compared with the BLS's private payroll estimate of 262,000.
- Initial jobless claims continue to trend lower and just yesterday we learned that the four-week moving average - which is often preferred as it is less volatile - hit the lowest level since April 2006 at around 297,000. In the survey week for nonfarm payrolls, initial jobless claims were 279,000; a 14-year low, and with the four-week moving average low as well, this series point to a further nice addition to payrolls in July.
- The Conference Board's consumer confidence index hit a new cyclical high in July, and more importantly for the labour market their labour differential ticked up. The labour differential subtracts those who find jobs hard to get from those who find jobs plentiful. This measure climbed to -14.8 from -16.1 as "jobs plentiful" rose to 15.9 from 14.6 while "jobs hard to get" were unchanged at 30.7.
Considering the above data I will go with the 'the trend is your friend'-approach and target 240,000 nonfarm payrolls, which is just north of the six-month moving average through June of 231,000 which, incidentally, is also the current Bloomberg consensus estimate. The unemployment rate is expected to stay at 6.1 percent.