Tomorrow’s job’s data is the grandaddy of ‘em all in terms of monthly economic data. Despite worsening economic data the employment data has actually remained rather strong in recent weeks. Jobless claims were down a bit this morning, the Challenger Job Report showed a decline in lay-offs, the ADP report showed 176K new private sector jobs, the ISM report showed a marginal decline in employment and then this morning’s ISM services report showed improvement in employment. All of this has economists scrambling to upgrade their estimates. Consensus currently sits at 90K, but Goldman Sachs explains their upgrade this morning (Via Zero Hedge):
“Revising Up Payroll Forecast; ISM Non-manufacturing Index Falls
1. We are upgrading our forecast for tomorrow’s nonfarm payroll report to +125k, from +75k previously. This week has featured five better-than-expected pieces of news relating to employment: 1) a relatively robust employment index in the ISM manufacturing survey, despite weaker activity overall in the sector, 2) a substantial month-over-month increase in online job advertising, 3) a much better than expected ADP employment report, 4) slightly lower new jobless claims (although it should be noted these pertain to a time period after the June employment survey was taken), and 5) an improvement in the ISM nonmanufacturing employment index. Despite the upgrade to our payroll forecast, we still expect the unemployment rate to hold at 8.2%.
2. The ISM non-manufacturing index fell to 52.1 in June from 53.7 in May, a larger decline than expected by the consensus. At its current level, the index is roughly consistent with 1.5% GDP growth. The components of the report were mixed. On the one hand, the general business activity index fell to 51.7 from 55.6 (now at the lowest level since November 2009) and the new orders index fell to 53.3 from 55.5. On the other, the employment component edged up to 52.3 from 50.8.”