ADP and TrimTabs Set Very Poor Tempo for Unemployment Report on Friday

ADP reported that private payrolls added only 135,000 jobs in May. This compares to a consensus of about 171,000 expected from Bloomberg, and this was worse than all estimates as the range from economists was 145,000 to 200,000. The May figure also was a revised 113,000. Some investors may say that this represents growth, but the growth is too little to matter and offers very little hope for any blowout report from the Labor Department this coming Friday.

Another somewhat muted report from TrimTabs Investment Research is confirming some dulled expectations after the ADP report. TrimTabs projected that job growth was also only 135,000 in May, while it projected that wages and salaries only rose 1.9%. TrimTabs claims that its jobs estimates are historically more accurate than the Labor Department’s report as the are based on daily income tax deposits into the U.S. Treasury from all U.S. salaried employees.

Estimates for Friday’s big report are likely to ratchet lower now, as there are 48 hours left before the report. Bloomberg has estimates of 7.5% unemployment for May. Its projection is 167,000 in total non-farm payrolls, and private sector payrolls are expected to be 178,000.

As you might expect, equity futures are lower after the news. S&P futures are down six points and DJIA futures are down 45 points. The yield on the 10-year Treasury note is now back down to 2.10%.