Monday's surprisingly strong manufacturing ISM report is
followed up by a depressingly weak labor market reading from
Automatic Data Processing
). The ADP report effectively ensures that estimates for Friday's
jobs report from the government's Bureau of Labor Statistics (BLS)
will be coming down from the 165K level. All of this adds to
reports out of Europe indicating that the region's economy may be
undergoing a deeper downturn than many are expecting.
A total of 119K private sector jobs were in created in April,
according to ADP, significantly below expectations of around 175K.
The jobs number for March was modestly revised downward to 201K
(from 209K). All the gains came from the service sector, which
offset losses in the goods producing sectors. Contrary to what we
saw in Monday's manufacturing ISM report, where the employment
component reached its highest level in months, the ADP report shows
jobs losses of 5K in manufacturing during the month.
Expectations for Friday's jobs report from the BLS are bound to
come down from the 165K following this very weak reading. The ADP
report has not been very precise in foretelling the BLS reading
lately. It was way stronger in March than what came out of the
government report and had been undershooting the BLS report in the
three months prior to March. We will know Friday morning how
accurate the April ADP reading is, but fears of a recurring labor
market Spring swoon do not look that unfounded.
On the earnings front,
CVS Caremark (
came out with better than expected earnings and revenue results.
) posted weaker than expected results and announced the separation
of the Chairman and CEO positions in response to the recent
controversy about Chairman/CEO Aubrey McClendon's unusual
compensation arrangement with the company. Chesapeake, like many
other exploration and production companies, has been hit hard by
the depressed natural gas prices.
Today's economic releases include the
ISM Services Index
which is scheduled at 10:00 AM EST and is expected to decrease to
which is scheduled for release at 10:30 AM EST.
To read this article on Zacks.com click here.