Thursday, May 04, 2017

April Employment Preview

by Bill McBride on 5/04/2017 11:59:00 AM

On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus, according to Bloomberg, is for an increase of 185,000 non-farm payroll jobs in April (with a range of estimates between 150,000 to 225,000), and for the unemployment rate to increase to 4.6%.

The BLS reported 98,000 jobs added in March.

Here is a summary of recent data:

• The ADP employment report showed an increase of 177,000 private sector payroll jobs in April. This was slightly above expectations of 170,000 private sector payroll jobs added. The ADP report hasn't been very useful in predicting the BLS report for any one month, but in general, this suggests employment growth close to expectations.

• The ISM manufacturing employment index decreased in April to 52.0%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll decreased by about 10,000 in April. The ADP report indicated 11,000 manufacturing jobs added in April.

The ISM non-manufacturing employment index decreased in April to 51.4%. A historical correlation between the ISM non-manufacturing employment index and the BLS employment report for non-manufacturing, suggests that private sector BLS non-manufacturing payroll jobs increased about 110,000 in April.

Combined, the ISM indexes suggests employment gains of about 100,000.  This suggests employment growth BELOW expectations.

Initial weekly unemployment claims averaged 243,000 in April, down from 250,000 in March. For the BLS reference week (includes the 12th of the month), initial claims were at 243,000, down from 261,000 during the reference week in March.

The decrease during the reference week suggests fewer layoffs during the reference week in April than in March. This suggests a somewhat stronger employment report in April than in March.

• The final April University of Michigan consumer sentiment index increased slightly to 97.0 from the March reading of 96.9. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Conclusion: None of the indicators alone is very good at predicting the initial BLS employment report.  The ADP report suggests a decent report, however the ISM surveys suggest weaker job growth. Weekly unemployment claims suggest slightly stronger job growth.    I'll take the under for April.