Here's my brief outlook for tomorrow's employment situation report.
Let's compare various data out there to last month's data to get an idea of what to expect. Last month's official BLS statistics were 80,000 jobs created for the month overall, 104,000 private jobs and a slightly improved unemployment rate of 9.0%.
This is a job creation report generated by employment services giant ADP. It is estimated based on statistics from ADP's clients. It covers private jobs only. Note that the ADP report is often very different from the BLS official report and its accuracy is always under suspicion.
- October: 130,000 (revised from 110,000)
- November: 206,000
Overall comparison: Big improvement.
A big gain in private sector jobs from this report, but it doesn't always correlate well with the official report. Still, this is a strong positive this month.
Challenger Job Cut
A report generated by sifting through and categorizing various announcements of layoffs. It covers both public and private. I find it to be one of the more useful intra-monthly employment reports.
- October: 42,759 (includes a large spike from military reductions)
- November: 42,474
Overall comparison: Very similar.
More Armed Forces layoffs, this time in civilian Air Force, will lead to another drag from government. This number has trending lower.
ISM Manufacturing And ISM Non-Manufacturing Indices
These are reports that survey manufacturing and service firms on many topics from orders to pricing to employment in their company. The respondents rate each category and a consensus is created with above 50 indicating expansion and below 50 indicating contraction. Employment outlooks are included, and the same scale used.
ISM manufacturing dropped but was still in expansion territory at 51.8.
ISM non manufacturing is not yet out for the month.
Overall comparison: Slight improvement.
The ISM Manufacturing report was quite good, and indicates job growth in that sector.
Weekly Initial Claims
This government report details the number of initial jobless claims that are filed every week. It is a good leading indicator of employment, and the data is quickly available. However, it's best to have an average to make it the most effective.
- Last Month Average: 404,500
- This Month Average: 395,750
Overall Comparison: Slight improvement.
Jobless claims continue to fall, finally cracking 400,000 per month. These are some of the best levels of the recovery.
Construction spending continues to steadily increase, and soon will be adding to GDP. It rose .8% this month, and construction, of course, has a great deal of potential to reduce unemployment.
The European sovereign debt crisis continues to worsen, and the region is almost unquestionably in a recession. However, the U.S. economic data have been strengthening and even accelerating. This can be seen in retail sales numbers, construction spending and even consumer confidence numbers (far from my favorite report). Initial claims have trended noticeably lower and the ADP report indicates strength. Many questions still need to be answered in Europe, and it is quite possible a severe European recession could drag the U.S. into one as well. But for now, the report should reflect the continued U.S. economic improvement. Government employment will unquestionably drag on the report, however.
With this in mind, as well as the data above, I expect a stronger employment situation report tomorrow. I'm guessing the overall non-farm payrolls will increase by about 150,000 and the private sector will be near the 190,000 range. The headline number may see a little change and drop to 8.8 or 8.9%. Despite the continuing uncertainty of the European debt crisis I believe this month there is a decent chance of an upside surprise to the numbers.