Thursday, May 06, 2010

Employment Report Preview

by Calculated Risk on 5/06/2010 11:59:00 PM

The BLS will release the April Employment situation report tomorrow (Friday) morning at 8:30 AM ET. The consensus is around 200K payroll jobs and the unemployment rate declining slightly to 9.6%.

The estimates for temporary Census 2010 hiring are around 100K, so the market expectation is for about 100K payroll jobs ex-Census. That is the key number (the underlying job creation). Note: the largest increase in Census 2010 hiring will happen in May - perhaps 500K payroll jobs - and then all of those jobs will be unwound over the next 6 months.

The earlier data this week has been somewhat mixed. ADP reported 32K private sector jobs in April, the largest monthly increase since January 2008.

The ISM manufacturing report suggested fairly robust hiring in the manufacturing sector:

ISM's Employment Index registered 58.5 percent in April, which is 3.4 percentage points higher than the 55.1 percent reported in March. This is the fifth consecutive month of growth in manufacturing employment.
Of course the manufacturing sector is relatively small.

And the ISM non-manufacturing report suggested job losses in the much larger service sector:
Employment activity in the non-manufacturing sector contracted in April for the 28th consecutive month. ISM's Non-Manufacturing Employment Index for April registered 49.5 percent. This reflects a decrease of 0.3 percentage point when compared to the 49.8 percent registered in March.
The weekly initial unemployment claims was elevated throughout April suggesting continuing weakness in employment, but the Monster employment index was strong.
The Monster Employment Index rose eight points in April as a number of industries initiated springtime recruitment efforts. The annual growth rate further accelerated, rising by 11 percent, the highest rate of increase since July 2007.
Anything above 100K ex-Census will be viewed as a solid report. As far as the unemployment rate, it usually drops 0.1% to 0.2% during the peak of the Census hiring (April and May) - however the participation rate fell so far during the recession, it is possible that the unemployment rate will tick up as more people reenter the workforce. We will know in a few hours ...