The market will likely be far less focused on Spain and Greece
today than has been the case lately. But it will be no less worried
about the domestic economic scene following this morning's
disappointing labor market reports. The revision to the first
quarter GDP report was broadly in-line with expectations, but there
is hardly anything positive to write about the ADP and Jobless
Claims readings.
For the second month in a row, the monthly jobs report from
Automatic Data Processing
(
ADP
) missed expectations. Since the ADP report tries to preview the
monthly labor market report from the government's Bureau of Labor
Statistics (BLS), this morning's disappointing read does not bode
well for tomorrow's BLS report.
For May, the ADP report is showing private-sector jobs of
133K, below expectations of 154K (according to Bloomberg). The
tally for April was modestly revised downwards to 113K (from 119K).
The expectation for private-sector jobs in Friday's BLS report is
for 164K.
This morning's Initial Jobless Claims report is equally
disappointing as it effectively reverses the gains of the last few
weeks. Initial Jobless Claims jumped by 10K last week to 383K,
getting back to April's high. But since the prior week's tally was
revised upwards by 3K, the real jump is 13K this week. The
four-week average, which smooths out the week-to-week volatility,
increased by 3.8K to 374.5K. While the period for this week's
Jobless Claims data does not correspond with the survey period for
tomorrow's BLS report (it will come out in the June report), it
nevertheless provides a less-than-reassuring read of the labor
market.
While the two labor market reports today are without doubt
negative, my overall take on this morning's revision to the first
quarter 2012 GDP report is broadly neutral. The 'headline' growth
number came down as expected, but the negative revision was
primarily due to the less significant drivers of inventories and
government spending.
The only negative in the report was the modest downtick in
consumer spending (from 2.9% to 2.7%), but even this lower level is
still an improvement over what had in the fourth quarter of 2011
(2.1%). On the favorable side, business investment got revised up
to the positive territory after the surprising negative read the
first time around.
(): ETF Research Reports
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