US Employment

The latest US employment indicators weren’t all as bad as the official report released on Friday. The unseasonably warm weather earlier this year undoubtedly boosted payrolls during Q1, when they rose by 225,670 per month on average. That probably contributed to the slowdown during Q2 to 75,000 per month on average. Nevertheless, it was hard to find any good news in June’s employment report. A couple of forward-looking indicators improved, with temporary help climbing to a fresh four-year high of 2.53 million and the index of aggregate weekly hours jumping 0.4% to a new cyclical high. Average hourly earnings rose 0.3% m/m, matching its high for the year. That was about all there was. There was more good news in other employment indicators:

(1) Business surveys. Among the positive indicators were June's employment indexes included in the national and regional business surveys. Both the manufacturing and non-manufacturing employment indexes were relatively strong at 56.6 and 52.3, respectively. The average employment index of the regional surveys conducted in several Federal Reserve districts also remained relatively high.

(2) ADP. The ADP measure of private payrolls showed a solid gain of 176,000 during June. It’s up 173,000 per month on average since the start of the year versus up 158,670 for private payrolls reported by the BLS. (Over the past three months, the comparison is 141,300 vs. 91,300.) The ADP numbers are widely dismissed as less accurate than the official numbers. I am not sure why. The ADP totals are based on actual payroll data as opposed to estimates statistically derived from samples. The BLS doesn’t even attempt to sample small businesses and instead relies on a controversial Birth/Death Adjustment factor that is based on a statistical model. ADP disaggregates their data to show payrolls by small, medium, and large companies. The small company data look quite plausible and correlate well with the findings of a monthly national survey of small business owners.

(3) Monster. The Monster Employment Index, which is based on a broad and comprehensive monthly analysis of US online job demand conducted by Monster Worldwide, Inc., jumped 5% y/y and 4% m/m.

Today's Morning Briefing: Banks of Last Resort. (1) A third year like the previous two. (2) Spain needs another round of sangria already. (3) Bears can take comfort in latest jobless report. (4) There is still a case for a rally over the rest of the year. (5) Another checklist for optimists with some caveats. (6) China has a beige book, which is flashing green. (7) How’s sector-neutrality working out? (8) Fiscal and monetary policies are both up to no good. (9) Central banks working hard to lose their credibility. (10) From NZIRP to NIRP. (11) Some signs of life in employment indicators. (12) “Savages” (- - -). (More for subscribers.)