FedUpUSA

Economic Data July 3, 2013

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ADP: +188k

The (ADP) Survey Sez!

During the month of June, the U.S. private sector added 188,000 jobs, driven by gains across all sizes of businesses, and with small companies showing the largest overall monthly increase. Most notably, the goods-producing sector added 27,000 jobs in June, a marked improvement over the decline the previous month.”

Hmmmm.

The large-business adds were most of the change.  Then again June is a traditionally strong month with seasonal employment, and also tends to add construction (which it did this month.)  Manufacturing, however, which is durable employment, only added 1,000.

This is a pretty good report; it suggests that the NFP number should be around +160k, perhaps a bit higher.  I’ll go with the over on this one and expect +175k on Friday, mostly because the construction number looks good — and despite being seasonal, a job is a job is a job.

The key for Friday, as always, will be the Employment:Participation ratio.  It should rise through the summer if trends hold, and start to flag off again in August or September — if patterns hold.  Therefore, provided it is not flat to down the pattern has to be considered to as “holding up” — at least for now.

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Jobless Claims: 343k

From the Department of Lies:

In the week ending June 29, the advance figure for seasonally adjusted initial claims was 343,000, a decrease of 5,000 from the previous week’s revised figure of 348,000. The 4-week moving average was 345,500, a decrease of 750 from the previous week’s revised average of 346,250.

The unadjusted number tracked reasonably as well.

Let’s look at the big table:

Meh.  That’s about as flat as it gets; regular claims up a bit, but EUC claims down.

I’m not impressed with this one either direction and it’s right into the survey week for NFP.  As such I go with no adjustment to the Friday guess.

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Non-Manufacturing ISM: 52.2%

Uh….

“The NMI™ registered 52.2 percent in June, 1.5 percentage points lower than the 53.7 percent registered in May. This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 51.7 percent, which is 4.8 percentage points lower than the 56.5 percent reported in May, reflecting growth for the 47th consecutive month. The New Orders Index decreased by 5.2 percentage points to 50.8 percent, and the Employment Index increased 4.6 percentage points to 54.7 percent, indicating growth in employment for the 11th consecutive month.

This is a problem.

New orders are now barely positive at 50.8 but employment is well above neutral at 54.7, up 4.6 on the month.

This sort of overshoot had better not materialize in actual production, but the new order figure says it is likely to.  And if it does then there is a big problem brewing for profitability — and employment — into the late summer and fall.

Exports also went negative, which reflects the trade balance figures out this morning, all the while inventory sentiment remains too high — and actual inventory level is growing.

This report shows signs of material overshoot in provisioning both materials and employment against actual final demand.  

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The Market-Ticker

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