April Employment Preview
On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for an increase of 180,000 non-farm payroll jobs in April, and for the unemployment rate to be unchanged at 3.8%.
Last month, the BLS reported 196,000 jobs added in March.
Here is a summary of recent data:
• The ADP employment report showed an increase of 275,000 private sector payroll jobs in April. This was below the consensus expectations of 180,000 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 above expectations.
• The ISM manufacturing employment index decreased in April to 52.4%. A historical correlation between the ISM manufacturing employment index and the BLS employment report for manufacturing, suggests that private sector BLS manufacturing payroll decreased about 5,000 in April. The ADP report indicated manufacturing jobs increased 5,000 in April.
The ISM non-manufacturing employment index for April will be released tomorrow.
• Initial weekly unemployment claims averaged 213,000 in April, about the same as in March. For the BLS reference week (includes the 12th of the month), initial claims were at 193,000, down from 216,000 during the reference week the previous month.
The significant decrease during the reference week suggests a stronger employment report in April than in March.
• The final April University of Michigan consumer sentiment index decreased to 97.2 from the March reading of 98.4. Sentiment is frequently coincident with changes in the labor market, but there are other factors too like gasoline prices and politics.
• Conclusion: In general these reports suggest a solid employment report. My guess is the headline employment increase will be above expectations (primarily based on strong ADP report and low level of unemployment claims during reference).