Thursday, August 01, 2019

July Employment Preview

by Calculated Risk on 8/01/2019 11:57:00 AM

On Friday at 8:30 AM ET, the BLS will release the employment report for July. The consensus is for an increase of 156,000 non-farm payroll jobs in July, and for the unemployment rate to decline to 3.6%.

Last month, the BLS reported 224,000 jobs added in June.

Here is a summary of recent data:

• The ADP employment report showed an increase of 156,000 private sector payroll jobs in July. This was ate consensus expectations of 155,000 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 July to 51.7%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll decreased 10,000 in July. The ADP report indicated manufacturing jobs increased 1,000 in July.

The ISM non-manufacturing index for July will be released next week.

Initial weekly unemployment claims averaged 212,000 in July, down from 222,000 in June. For the BLS reference week (includes the 12th of the month), initial claims were at 216,000, down slightly from 217,000 during the reference week the previous month.

This suggest employment growth near expectations.

• The final July University of Michigan consumer sentiment index increased to 98.4 from the June reading of 98.2. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.

• Conclusion:  Manufacturing was weak in July, however the ADP employment suggests a report close to the consensus.   Over the last several years, the BLS has reported about the consensus for July, so my guess is the report will be above the consensus.