Monday, July 1st, 2024
We have another holiday-shortened week of trading. Thursday July 4th marks Independence Day, the 248th birthday of the United States. It’s also Jobs Week — the first week of a new month, in which a fresh Job Openings and Labor Turnover Survey (JOLTS) Tuesday joins with private-sector payrolls from Automatic Data Processing (ADP) Wednesday, which will also bring us Weekly Jobless Claims a day earlier than its normal Thursday release.
But the biggest jobs report comes out Friday morning. This will be the non-farm payroll and household survey from the U.S. Bureau of Labor Statistics (BLS), which will give us official numbers of new job gains and an updated Unemployment Rate. Projections currently are for fewer than 200K new jobs filled last month — on both ADP and BLS prints — and more than 230K new jobless claims for last week. Numbers like these would be further evidence of a cooling labor force.
We know that employment is one half of the Fed’s dual mandate. This, along with keeping inflation under control, are two very large objectives, but there are only two of them. Thus far, based on recent inflation data — including Friday’s PCE report, which saw year-over-year figures come in at +2.6%. This is half of what we were seeing in October of 2022, when +5.2% core PCE year over year were sounding the alarm on inflation.
As far as the JOLTS figures, this might be interesting. For the last report, looking a month in arrears to April, we saw 8.06 million job openings in the U.S. Compare this to roughly 12 million back in early 2022, and note the forecast for May is sub-7 million. The previous Hires Rate, at 3.6%, had been over 4% until the start of 2023, and the Separations Rate is now back near 10-year lows.
Thus, we will look for notable declines from current jobs estimates. Should we see them, this would likely set in motion market activity reflecting a new hopefulness that the Fed may see fit to reducing interest rates from their current 5.25-5.50% range, where we’ve been since July of last year. The next Fed meeting takes place beginning four weeks from tomorrow, with a new decision on rates the following day, July 31st. Currently, expectations are for only one rate cut this year — but as always, the Fed states that it will be “data dependent.”
After the opening bell today, we’ll see some key data. These include final S&P Manufacturing and ISM Manufacturing PMI for June, and Construction Spending for May. S&P Manufacturing is expected to stay above the crucial 50% demarcation point between growth and loss to +51.7%, while ISM Manufacturing is anticipated at +49.2% — below the 50-level but still higher than the previous month’s +48.7%. Of course, further downside surprises in any of this may also point to a softer Fed inflation stance.
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Holiday-Shortened Jobs Week: What Would Downward Surprises Bring?
Monday, July 1st, 2024
We have another holiday-shortened week of trading. Thursday July 4th marks Independence Day, the 248th birthday of the United States. It’s also Jobs Week — the first week of a new month, in which a fresh Job Openings and Labor Turnover Survey (JOLTS) Tuesday joins with private-sector payrolls from Automatic Data Processing (ADP) Wednesday, which will also bring us Weekly Jobless Claims a day earlier than its normal Thursday release.
But the biggest jobs report comes out Friday morning. This will be the non-farm payroll and household survey from the U.S. Bureau of Labor Statistics (BLS), which will give us official numbers of new job gains and an updated Unemployment Rate. Projections currently are for fewer than 200K new jobs filled last month — on both ADP and BLS prints — and more than 230K new jobless claims for last week. Numbers like these would be further evidence of a cooling labor force.
We know that employment is one half of the Fed’s dual mandate. This, along with keeping inflation under control, are two very large objectives, but there are only two of them. Thus far, based on recent inflation data — including Friday’s PCE report, which saw year-over-year figures come in at +2.6%. This is half of what we were seeing in October of 2022, when +5.2% core PCE year over year were sounding the alarm on inflation.
As far as the JOLTS figures, this might be interesting. For the last report, looking a month in arrears to April, we saw 8.06 million job openings in the U.S. Compare this to roughly 12 million back in early 2022, and note the forecast for May is sub-7 million. The previous Hires Rate, at 3.6%, had been over 4% until the start of 2023, and the Separations Rate is now back near 10-year lows.
Thus, we will look for notable declines from current jobs estimates. Should we see them, this would likely set in motion market activity reflecting a new hopefulness that the Fed may see fit to reducing interest rates from their current 5.25-5.50% range, where we’ve been since July of last year. The next Fed meeting takes place beginning four weeks from tomorrow, with a new decision on rates the following day, July 31st. Currently, expectations are for only one rate cut this year — but as always, the Fed states that it will be “data dependent.”
After the opening bell today, we’ll see some key data. These include final S&P Manufacturing and ISM Manufacturing PMI for June, and Construction Spending for May. S&P Manufacturing is expected to stay above the crucial 50% demarcation point between growth and loss to +51.7%, while ISM Manufacturing is anticipated at +49.2% — below the 50-level but still higher than the previous month’s +48.7%. Of course, further downside surprises in any of this may also point to a softer Fed inflation stance.
Questions or comments about this article and/or author? Click here>>